Declaration of income from the leasing of common areas in homeowners' associations

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the tax treatment of income received by a homeowners' association from the leasing of its common areas. This resolution addresses both the withholding obligation and the responsibility to declare such income in individual income tax returns.

What the DGT has ruled

The inquiry focuses on determining whether the homeowners' association must apply withholdings and how the members of the association themselves must declare the income. The ruling establishes the following points:

• Attribution of income: Homeowners' associations are not taxpayers. Therefore, income obtained from the leasing of common areas is attributed directly to each of its members based on their participation in the association.
• Classification of income: This income is classified, as a general rule, as income from real estate capital, unless the lease constitutes an economic activity.
• Withholding obligation: The lessee is obliged to apply the corresponding withholding if they are a liable subject according to the Personal Income Tax Regulation (RIRPF), unless specific legal exceptions apply.

What it means for you

If you are an owner in a community that leases common spaces (such as rooftops for antennas or common-use premises), you must take into account that this income does not belong to the association as an entity, but is considered your own income derived from your property. This implies that the amount corresponding to your share of participation must be included in your IRPF taxable base as income from real estate capital. The tax burden falls directly on the individual, following the limits established in the IRPF Law.

What should be done

It is necessary to verify the participation share of each member and ensure that the attributed income is correctly reflected in the annual tax return. Likewise, it should be checked whether the lessee is complying with their obligation to apply legal withholdings to avoid discrepancies with the Tax Administration. Since each community situation may present specific peculiarities, it is necessary to assess each case individually.