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V2608-14 6 October 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IRPF · actividad económica

Treatment of depreciation for leased properties: economic activity vs. income from real estate capital

A taxpayer has requested clarification regarding the valuation and depreciation of inherited properties intended for lease, either as an economic activity or through a company. The DGT clarifies the valuation criteria, applicable depreciation coefficients, and the conditions for treating properties as second-hand assets.

The question raised

1) For the purposes of Personal Income Tax, the question is raised as to what the allocation value of the leased properties would be, what their depreciable value would be and, where applicable, the depreciation percentage applicable to the aforementioned properties.

The DGT's ruling

If an economic activity is carried out, the allocation is made at the acquisition value (inheritance value according to Inheritance Tax) and depreciation is applied to said value excluding the land. If the properties are more than ten years old, they may be considered used to double the maximum linear depreciation coefficient. If the requirements for economic activity are not met, the depreciation of income from real estate capital is limited to 3% of the higher of the acquisition cost or the cadastral value (excluding the land).

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