Owners of occupied properties will not be taxed on imputed rental income if they initiate eviction proceedings

Managing properties that have been subject to illegal occupation presents a complex scenario for owners, not only in the civil sphere but also in the fulfillment of their tax obligations. A recent resolution from the Dirección General de Tributos (DGT) establishes a determining criterion to avoid the tax burden on homes that the owner cannot enjoy.

What the DGT has ruled

The inquiry addresses the possibility of excluding the imputation of imputed rental income in the Personal Income Tax (IRPF) when a home has been illegally occupied by third parties against the will of its owner. According to the DGT's criteria, the exclusion provided for in Article 85.1 of the IRPF Law applies as long as the corresponding judicial eviction procedure has been initiated.

A key aspect of this resolution is the moment the exclusion is applied: it takes effect from the instant the judicial procedure begins, without the need to wait for a final ruling or the effective recovery of possession. For this measure to be valid, the start of the process must be proven through the means of evidence admitted by law.

What this means for you

If you are the owner of a home that has been illegally occupied, the regulations allow you to stop paying tax on the imputation of imputed rental income during the period in which the property is not at your disposal. This represents tax relief, as you will not have to pay taxes on a capital benefit that, in practice, you cannot receive due to the occupation.

It is fundamental to understand that the key is not the recovery of the home, but the legal action of eviction. While the judicial process is ongoing, the exclusion of the income is applicable.

What should be done

In a situation of occupation, it is necessary to act swiftly so that the tax benefit is effective as soon as possible. Owners should:

• Initiate the judicial eviction procedure immediately.
• Keep all documentation that proves the start date of the legal proceedings.
• Ensure that the proof of the start of the process is solid for presentation before the Tax Administration.

Each occupation situation presents different nuances, so it is necessary to assess the documentation and the status of the judicial process to ensure compliance with the requirements demanded by the regulations.