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V5234-26 22 July 2026 · SG de Impuestos sobre el Consumo Criterion in force
IVA · cambio de uso

Sale of properties as homes after change of use requires IVA deduction regularisation

A company bought hotel units to operate as hotels, but after renovating them decides to sell them as residential properties. Hacienda examines the deductibility of IVA on the purchase and renovations, and how the final sale should be taxed.

The question raised

The taxation under Value Added Tax regarding the aforementioned operations is raised, specifically:

The DGT's ruling

If the renovations are not for rehabilitation purposes, the sale of the properties as dwellings is exempt from VAT as it constitutes a second or subsequent supply. Given that the initial intended use was the operation of apart-hotels, the change of use requires the regularization of the VAT deductions claimed during acquisition and renovations. The regularization must comply with the regulations on capital goods and the rectification of deductions, as applicable.

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