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V1956-18 2 July 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · patrimonio protegido

Funds for purchasing a home may constitute a contribution to protected assets if formalised before a notary

Parents enquired whether funds intended for purchasing a home for their disabled daughter could be considered a contribution to protected assets. The Directorate-General for Taxes (DGT) ruled that this is possible provided it is executed via a public deed before a notary and the property is integrated into said assets.

The question raised

1) Whether the own funds of the taxpayer and his wife intended for the purchase of the dwelling can be considered a contribution to protected assets for the purposes of applying the tax benefits established for such contributions, and how the reduction established in the Personal Income Tax (IRPF) would apply if the contribution exceeds the legally established annual limits.

The DGT's ruling

For funds to be considered a contribution to protected assets and grant rights to tax benefits, they must be contributed via a public document before a notary or a judicial resolution. If existing assets are used to purchase the dwelling, no regularization shall occur if the property is assigned to the protected assets in accordance with Law 41/2003. The expenditure of money to meet vital needs is not considered a disposal act that mandates regularization. Contributions exceeding the annual limits allow for a reduction of the taxable base in the following four periods.

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