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V1926-17 19 July 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · comunidad de propietarios

Rental income from a community terrace is subject to withholding tax

A homeowners' association has enquired about the tax treatment of income derived from renting out a terrace and whether withholding tax should be applied. The Directorate General for Taxes (DGT) has ruled that such income is attributed to the co-owners as income from real estate capital and that the payer must apply the relevant withholding tax.

The question raised

Determination of the income attributable to co-owners. Subjectivity to withholding of income obtained from leasing.

The DGT's ruling

Homeowners' associations are not taxpayers of Personal Income Tax (IRPF); instead, income is attributed to their members pursuant to Article 8.3 of the Personal Income Tax Law (LIRPF). This income shall be characterized as income from real estate capital, unless it is classified as an economic activity. As the payer is an entity obligated to withhold, income from the lease of urban real estate is subject to withholding, unless the annual income does not exceed 900 euros.

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