Owners will receive community subsidies according to their participation quota

When a community of owners receives a subsidy, the way this benefit is distributed among neighbors has direct tax implications that are not always followed in practice. The Directorate General of Taxes (DGT) has specified the treatment this type of income must receive to avoid contingencies in other taxes.

What the DGT has ruled

The advisory body has determined that income from a subsidy must be imputed to each co-owner in strict proportion to their participation coefficient in the building. This criterion is based on the nature of horizontal property and current regulations.

The resolution warns that if the distribution of the subsidy is not carried out in an equivalent manner to the owners' contribution, a collateral tax effect will occur: the taxable event of a gift. In this scenario, owners who receive an amount higher than what they are proportionally entitled to will be receiving a gift from those neighbors who receive a smaller portion.

What this means for you

If you are an owner of a property under the horizontal property regime, the management of any aid or subsidies received by the community must be rigorous. It is not enough to have an agreement from the owners' meeting that decides to distribute the money unequally or in equal parts if the participation quotas are different.

A distribution that does not respect the participation quota can lead to two problems:

• In Personal Income Tax (IRPF): The correct imputation of income according to the regulations of Law 35/2006.
• In Inheritance and Gift Tax: The emergence of a gift between neighbors, which would require paying tax on that excess received.

What should be done

Upon receipt of any type of subsidy by the community, it is necessary to verify that the minutes of the owners' meeting establish the distribution of funds in accordance with the participation coefficients of each property. Ensuring this compliance prevents owners who benefit from an unequal distribution from having to face Inheritance and Gift Tax on the excess amount.