Self-employed individuals may proportionally deduct housing expenses if used for their business activity

Individuals who carry out an economic activity in their own habitual residence have a way to deduct certain housing expenses. The Dirección General de Tributos (DGT) has specified the necessary conditions for this tax benefit to be valid before the Administration.

What the DGT has ruled

The criteria establish that the partial allocation of divisible assets, such as a home, is possible as long as the part destined for economic activity is capable of separate and independent use from the rest of the property. If this requirement of independence is met, the taxpayer may proportionally deduct the expenses derived from the ownership of the property.

Among the concepts that allow this proportional deduction are:

• Depreciation (always excluding the value of the land).
• Property Tax (IBI).
• Interest on loans linked to the housing.
• Waste collection tax.
• Homeowners' association fees.
• Home insurance.

In the specific case of depreciation, the regulations require that it be applied only to the proportional part of the acquisition value, always subtracting the value of the land from the calculation.

What this means for you

If you work from home, it does not mean you can deduct all of your household expenses. The key lies in the ability to clearly separate the space destined for economic activity from the space destined for personal use. The Administration requires that that part of the home can function autonomously.

This resolution confirms that common housing expenses can be absorbed by the economic activity, provided that an exact calculation is made of the proportion corresponding to the affected part. It is fundamental that the calculation base for depreciation is correct, omitting the value of the land to comply with the Personal Income Tax (IRPF) Law and its Regulations.

What you should do

To ensure the correct application of this criterion, it is necessary to have documentation that justifies the part of the home used for the activity. A detailed breakdown of expenses must be carried out, and proportionality must be applied rigorously. Since the allocation must be real and separable, it is important to evaluate the physical configuration of the property to guarantee that it meets the requirement of independent use required by the DGT.