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V2972-17 16 November 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · reserva para inversión en canarias

Acquisition and renovation of holiday homes only qualifies for RIC if deemed an economic activity

A taxpayer in the Canary Islands has inquired whether the purchase and renovation of a property for holiday rentals allows for the use of the Canary Islands Investment Reserve (RIC). The Directorate General for Taxes (DGT) has ruled that this will depend on whether the rental activity is classified as an economic activity or as income from real estate capital.

The question raised

Whether the acquisition of said housing and the cost of its rehabilitation are eligible to realize the Canary Islands Investment Reserve (RIC) provided by the applicant.

The DGT's ruling

For the investment to be eligible for the RIC, the property must be used for an economic activity. The leasing of real estate constitutes an economic activity only if at least one person under a full-time employment contract is employed or if services specific to the hotel industry are provided (such as catering or cleaning during the stay). If cleaning is only performed upon entry or departure, the income shall be classified as income from real estate capital and will not allow for the RIC.

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