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V2326-24 8 November 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Permanent residence status required to apply 60% rehabilitation tax reduction on rental income

A query was raised regarding whether the 60% tax reduction for rehabilitation applies to a commercial premises converted into a dwelling. The DGT ruled that two conditions must be met: the works must qualify as rehabilitation under the Tax Regulations, and the contract must be a residential lease.

The question raised

Question posed: Whether the reduction for residential leasing established in letter c) of Article 23.2 of the Tax Law is applicable in the event of the conversion of a commercial premises into a residence.

The DGT's ruling

To apply the 60% reduction of the positive net income, a dual condition is required. First, that the property has been subject to a rehabilitation process according to Article 41.1 of the RIRPF completed within the two years prior to the contract. Second, that the lease concerns a real estate property intended for residential use, whose primary purpose is to satisfy the permanent housing need of the lessee. If the rehabilitation condition is not met, but the residential use condition is, the 50% reduction provided for in letter d) of Article 23.2 of the LIRPF would apply.

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