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V2863-20 22 September 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Expenses paid by a child for a property lent by a parent count as real estate income for the lender

A property owner lends their second home to their daughter for use without a formal lease agreement, and the daughter covers the current expenses that would normally be the father's responsibility. The Directorate General for Taxes (DGT) has ruled that these expenses paid by the daughter are considered full income for the father, even if they remain deductible.

The question raised

Taxation under Personal Income Tax (IRPF) of income from real estate.

The DGT's ruling

The amount of expenses assumed by the assignee, for which the assignor is responsible for payment, is computed as gross income from real estate capital for the assignor. These amounts are deductible as expenses if they meet the requirements of the Personal Income Tax Law (LIRPF). Given the existence of a kinship relationship, the total net income may not be lower than the imputed income according to Article 85 of the LIRPF.

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