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V2305-19 5 September 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · cesión de uso

Free transfer of use of a property to a relative results in imputed real estate income

A property owner inquired whether allowing their niece to live in their home free of charge generates real estate capital income. The Directorate General for Taxes (DGT) ruled that, if the free nature of the arrangement is proven, no capital income is generated, but the real estate income established by law must still be imputed.

The question raised

Taxation of the homeowner due to the free transfer of the use of the property.

The DGT's ruling

If it is proven that the transfer of the property is free of charge, the owner does not obtain returns from real estate capital. However, as it concerns an urban property that does not generate such returns, the holder must carry out the imputation of real estate income pursuant to Article 85 of the Personal Income Tax Law (LIRPF). The gratuitous nature of the transfer is a matter of fact that must be proven by the taxpayer.

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