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V3260-18 20 December 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IP · actividad económica

Property leasing is an economic activity only if at least one full-time employee is hired

A property owner with 10 dwellings inquired whether hiring her daughter to manage the rentals would convert her real estate capital income into income from economic activities. The DGT ruled that this only occurs if a person is employed under a labour contract on a full-time basis.

The question raised

1) Whether the hiring of her daughter would determine that the income derived from the rental of dwellings would be classified as income from economic activities.

The DGT's ruling

The leasing of real estate is considered an economic activity only when at least one person employed under a full-time labor contract is used for its management. If this requirement is met, the dwellings are considered assets assigned to the activity and could be exempt from Wealth Tax, provided that the activity is carried out habitually, personally, and directly, and is the taxpayer's main source of income.

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