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V1690-19 9 July 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · disposición transitoria novena

Seniority reduction may apply if property was not used for business activity or if three years have passed since the end of business lease

The taxpayer asks whether they can apply the reduction under the ninth transitional provision of the IRPF Act for the sale of a property acquired before 1994 that has been leased. The DGT rules that application depends on whether the property is considered an asset not used for economic activity or if three years have elapsed since it was decoupled from such activity.

The question raised

Possible application of the ninth transitional provision of the Personal Income Tax Law.

The DGT's ruling

If the lease is for business purposes, the property is considered assigned to an economic activity and the reduction does not apply, unless three years have passed since the termination of the contract. If the lease is for an isolated element, it is considered not assigned and the reduction applies, unless the economic activity requirements of Article 27.2 of the Personal Income Tax Law are met. The reduction is applied to the maximum possible amount, respecting the joint limit of 400,000 euros of the transfer values.

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