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V2958-17 16 November 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Only unpaid rental income may be deducted as bad debts

Consultants have enquired whether amounts recovered through court rulings following tenant defaults can be deducted as bad debt expenses. The DGT has ruled that only rental income is deductible under certain requirements, specifically excluding compensation for damages.

The question raised

In view of the insolvency of those sentenced to pay, they ask whether "they can deduct the entirety of these expenses as doubtful debt expenses".

The DGT's ruling

To deduct doubtful debt balances in income from real estate capital, the amount must have been previously included as gross income. It is required that the debtor be in insolvency proceedings or that more than six months have passed since the first collection attempt without credit renewal. Amounts for damages to the dwelling are not doubtful debts, but must be assessed as capital gains or losses.

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