Skip to content
Back to index
V1502-18 4 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · prorrata general

Application of VAT pro rata in mixed leases and 3% depreciation deduction for Personal Income Tax

A community of property seeks clarification regarding VAT deductibility in its leasing activities and property depreciation for Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) clarifies that the VAT pro rata method must be applied when conducting both taxable and exempt activities, and that IRPF depreciation is limited to 3% of the higher value between the acquisition cost or the cadastral value (excluding land).

The question raised

Question posed The consulting community raises: 1. Regarding VAT, the possible deductibility of Value Added Tax amounts incurred in the acquisition of goods and services intended for the development of said leasing activity, and compliance with the obligation to declare using Form 303, quarterly declaration of Value Added Tax (VAT) Self-assessment of Value Added Tax. 2. Regarding Personal Income Tax: determination of the community's net income, deduction of expenses for property depreciation.

The DGT's ruling

Regarding VAT, as there are no differentiated sectors, the general or special pro rata is applied to deduct tax amounts according to the proportion of taxable and non-exempt operations. Regarding Personal Income Tax (IRPF), if the lease is not an economic activity, the income constitutes income from real estate capital. The deductible depreciation of the properties shall be 3% of the higher of: the acquisition cost (inheritance expenses and taxes) or the cadastral value excluding the land.

Email
Contact