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V1777-19 11 July 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Tenant rehousing costs are not deductible without a direct correlation to gross income

A query was raised regarding whether a landlord can deduct the costs of rehousing a tenant following an incident in the property. The Directorate General for Taxes (DGT) ruled that these expenses are not deductible as they lack a direct correlation with the generation of gross income.

The question raised

Whether the relocation expenses of the tenant, paid by the landlord of a dwelling that has become uninhabitable due to an accident, for which no type of compensation has been received, are considered a deductible expense for income from real estate capital.

The DGT's ruling

Relocation expenses are not considered deductible expenses for income from real estate capital. The deductibility of expenses is contingent upon the generation of full income with which there is a necessary correlation. In the absence of such correlation, they cannot be deducted.

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