Owners may apply the 50% rental reduction if the use is for a natural person

The application of tax reductions for residential leasing is a constant point of interest for property owners. Recently, the Dirección General de Tributos (DGT) has specified the necessary conditions for this tax benefit to be applicable even when the tenant is not an individual, but a legal entity.

What the DGT has ruled

The inquiry focuses on the possibility of applying the 50% reduction provided for in Article 23.2 of the Personal Income Tax Law (LIRPF). The criteria establish that, for the property to be considered intended for housing, it is not strictly necessary for the contract to be signed with an individual.

If the tenant is an entity or legal person, the owner may access the reduction provided that two concurrent requirements are met:

• That the property is effectively used for housing.
• That the exclusive use of the property falls to a specific natural person.

The administration emphasizes that the concurrence of these elements is a matter of fact. Therefore, the mere existence of the contract is not enough; the reality of the occupation must be proven through valid means of evidence.

What this means for you

This criterion has direct relevance for homeowners who choose to rent their properties to companies, for example, to facilitate the residence of their employees or collaborators. If the lease agreement and the reality of the occupation allow for the clear identification of the natural person who will inhabit the home, the owner retains the right to the 50% tax reduction on their IRPF taxable base.

However, the burden of proof lies with the taxpayer. If the tenant company uses the property for other purposes or if it cannot be determined with certainty which natural person uses it for their housing, the reduction could be denied by the Administration.

What you should do

In this scenario, it is fundamental that the documentation supporting the operation is solid. The lease agreement must clearly specify the purpose of housing and, preferably, identify the natural person who will use the property. It is necessary to have means of proof that demonstrate that the reality of the occupation coincides with what was agreed, thereby ensuring that the operation complies with the requirements of the LIRPF.