Owners of properties unusable due to urban planning reasons will not be subject to imputed income

The regulations of Personal Income Tax (IRPF) establish the obligation to impute real estate income based on the ownership of certain assets. However, there are exceptional situations where this tax burden should not apply, a matter that the Dirección General de Tributos (DGT) has recently clarified.

What the DGT has resolved

The inquiry analyzes whether the imputation of income is appropriate for a property that, due to its situation, cannot be used. The DGT's criteria are based on Article 85.1 of the Personal Income Tax Law (LIRPF).

According to the tax authority's interpretation, no income will be estimated for properties that are under construction or when, for urban planning reasons, the property is not susceptible to use. A relevant aspect of the ruling is that the regulations do not require the presentation of a specific document or a particular certificate to prove this condition. Instead, the administration admits non-imputation if the state of unusability is proven through any means admitted in Law.

What this means for you

If you are a co-owner of a property that is in a situation of impossibility of use due to urban planning restrictions or regulations, you are not obliged to declare real estate income for said asset in your tax return.

This exemption is applicable as long as the cause of the lack of use is technical or urban planning-related, effectively preventing the use of the property. The key lies in the ability to demonstrate to the Administration that the asset cannot be used due to these external causes.

What you should do

In such a situation, it is necessary to have evidentiary elements that support the impossibility of using the property. Since the DGT allows any means of proof admitted in Law, it is fundamental to collect all technical or administrative documentation that justifies the urban planning status of the asset.

It is necessary to assess each particular case to determine if the cause of the lack of use fits within the scenarios provided by the LIRPF and to ensure that the evidence provided is sufficient to avoid requests for information from the Tax Agency.