DGT denies the 60% Personal Income Tax (IRPF) reduction if the tenant is a company

The Directorate General of Taxes (DGT) has clarified a common scenario in real estate asset management: the rental of properties intended for housing, but where the contract is formalized with a legal entity. The central issue lies in whether this type of operation allows the owner to apply the reduction in net income provided for in the Personal Income Tax (IRPF) regulations.

What the DGT has ruled

The binding ruling determines that, for a lease to be classified as intended for housing, the primary purpose of the contract must be to satisfy the permanent housing need of the tenant. In cases where the tenant is a commercial company, the administration establishes that the property does not constitute the entity's residence, regardless of whether the actual use is for the accommodation of an employee.

Since the company is the holder of the contract, the lease is decoupled from the housing category for tax purposes. Consequently, the owner cannot benefit from the reduction in net income that applies to habitual residence rentals.

What this means for you

This criterion has a direct impact on property owners who choose to rent their properties to companies to facilitate worker accommodation. While the operation is legal under the Urban Leasing Law (LAU), fiscally it is treated as a lease different from housing. This implies that the income obtained will be taxed in full, without the possibility of applying the 60% tax benefit that incentivizes residential rentals.

What should be done

Given this situation, it is necessary to evaluate the structure of the lease contracts and the tax impact that each business model entails. Owners must consider that formalizing contracts with commercial companies alters the tax classification of the income. It is recommended to analyze the net profitability after taxes before deciding between a direct lease to individuals or one through a legal entity.