Exemption from imputed real estate income for properties under construction
The Directorate General of Taxes (DGT) has issued a relevant ruling for owners of properties that are in the construction phase or present urban planning limitations that prevent habitability. The central issue revolves around whether the imputation of real estate income should be applied in Personal Income Tax (IRPF) when the property is not yet finished.
What the DGT has resolved
According to Article 85.1 of the Personal Income Tax Law (LIRPF), no income should be estimated for properties that are under construction or that, for urban planning reasons, are not suitable for use. The resolution clarifies that current regulations do not establish the obligation to present a specific document or a particular certificate to prove this condition.
However, the DGT emphasizes that the burden of proof lies with the taxpayer. It is necessary to demonstrate that the property is not suitable for use through means of evidence admitted by law. The final assessment of such evidence will correspond to the verification bodies of the Tax Administration.
What this means for you
If you are the owner of a dwelling or a commercial premises that is being built, you are not obliged to declare real estate income for said asset as long as it remains in that situation. This represents relief in the tax burden during the construction period. However, the absence of an official document model means that the quality and strength of the evidence presented during a possible inspection will be decisive in avoiding tax adjustments.
What you should do
In the event of potential action by the Administration, it is fundamental to have technical documentation that supports the state of the works and the impossibility of using the property. It is recommended to:
- Keep all technical documentation and licenses that prove the state of construction.
- Maintain records that demonstrate the lack of habitability or use due to urban planning causes.
- Assess the particular situation of each property to ensure it meets the requirements of Article 85.1 of the LIRPF.
Frequently asked questions
- Is there an official document to prove that a property is under construction?
- No, the regulations do not require a specific document, but the taxpayer must prove it using means admitted by law.
- What happens if the property has urban planning restrictions?
- If the restrictions prevent the property from being suitable for use, no income will be imputed according to the LIRPF.