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V1659-18 12 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · exención de vivienda

Rental of property with garage and storage exempt from VAT if tenant is a physical person using it as residence

The consultant asks about VAT treatment of a rental of property with garage and storage, and deductibility of expenses in personal income tax. The tax authority responds that rental of property is exempt from VAT if the tenant is a physical person and uses it as a residence, and that utility expenses are not deductible in personal income tax when the property is unoccupied.

The question raised

Taxation under Value Added Tax for said leasing activity whether the lessee is an individual or an entrepreneur or professional, as well as whether it is a joint lease with the apartment or an independent lease.

The DGT's ruling

The leasing of residential property is exempt from VAT provided that the actual use is residential, with the exemption extending to garages and storage rooms leased jointly. If the lessee is a legal entity or uses the property for business activity, the rent shall be subject to the general rate of 21%. For Personal Income Tax purposes, utility expenses are only deductible during the period in which the property is leased. Furniture and fittings are deducted through depreciation.

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