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V2993-20 5 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · arrendamiento de vivienda

Leasing of residential property for professional office use is subject to 21% VAT

A lawyer has requested clarification regarding the taxation of a property lease intended for both residential and partial professional office use. The Directorate General for Taxes (DGT) has ruled that the rent must be subject to 21% VAT and provides guidance on how to deduct expenses for Personal Income Tax (IRPF) purposes.

The question raised

Taxation under Value Added Tax regarding the aforementioned lease.

The DGT's ruling

The lease of a property is not exempt from VAT if the lessee uses it for purposes other than residential, such as offices or professional studios. In this case, the lessor must charge 21% VAT on the total rent. Regarding Personal Income Tax (IRPF), the dwelling may be partially used for business purposes if the area is divisible and can be used independently, allowing for the deduction of utility expenses based on the percentage resulting from applying 30% to the proportion of square meters allocated to the activity.

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