Imputation of real estate income on urban plots with buildings

The Directorate General of Taxes (DGT) has issued a relevant criterion for real estate owners who possess urban plots with buildings that are not linked to an economic activity. The core of the issue lies in determining whether the entirety of the land should be counted for the imputation of income in Personal Income Tax (IRPF).

What the DGT has resolved

The binding ruling establishes that, in the case of urban plots containing constructions not used for an economic activity, the imputation of income does not proceed for the part of the plot that has not been built upon. The technical criterion focuses on delimiting the calculation base for the existing building.

According to the resolution, for the built part, the calculation base for the imputed income will be the cadastral value of the construction together with its proportional share of the land. The application of the corresponding percentage will depend on whether the cadastral values have been subject to revision through collective valuation during the last ten tax periods, in accordance with the regulations of the Law on Personal Income Tax (LIRPF).

What it means for you

This criterion has a direct impact on individuals who own urban land with buildings. If you are the owner of a plot where only a part is built and said property is not used for an economic activity, you should not include the unbuilt part of the land in the calculation of your real estate income.

This implies that the tax burden from income imputation is limited exclusively to the built surface area and its corresponding proportional share of land, avoiding excessive taxation on the remaining land that has no associated building.

What you should do

It is necessary to verify the composition of your real estate assets and the use of the existing constructions. You should check if your cadastral values have been recently revised to apply the correct percentage in determining the income. Since the application of this criterion depends on the nature of the land and the existence of constructions, it is fundamental to assess each patrimonial situation individually to ensure that the imputation of income complies with the provisions of the Administration.