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V2437-24 4 December 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Leases to relatives must be taxed at a minimum yield if net income is below the statutory threshold

A query was raised regarding the Personal Income Tax (IRPF) treatment of a property leased by parents to their daughter. The Directorate General for Tax Regulations (DGT) clarifies that, as it is a lease between relatives, a minimum yield must be applied if the actual net income is lower than the amount calculated according to statutory rules.

The question raised

Taxation of the transaction for Personal Income Tax purposes.

The DGT's ruling

If the lease is not an economic activity, the income constitutes returns from real estate capital. Since the lessee is a relative up to the third degree inclusive, the total net return may not be less than the minimum return provided for in Article 85 of the Personal Income Tax Law. For urban properties, this minimum is calculated by applying 2 percent to the cadastral value (or 1.1 percent in municipalities with collective valuation since 1994).

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