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V1476-14 4 June 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción de cuota

Purchasers of condohotel properties may deduct VAT if used for professional business activities

A query was raised regarding whether buyers of properties intended for a condohotel model can deduct input VAT. The DGT ruled that, by leasing the properties for business purposes, the purchasers act as taxable persons and may deduct VAT to the extent that the properties are used for leasing rather than private use.

The question raised

Deductibility by the acquirers of the tax amount incurred upon the acquisition of the dwellings.

The DGT's ruling

The acquirers are considered entrepreneurs as they allocate the real estate to their business activity through leasing. They may deduct the VAT incurred to the extent that the dwellings are used for taxable transactions that grant a right to deduction, such as the lease to the applicant. They may not deduct the portion corresponding to the owners' own use. As these are investment goods, the deduction shall be applied according to the foreseeable use and must be regularized during the following nine years if the actual degree of utilization varies.

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