The purchase of a garage may be subject to VAT depending on its leasing history

The tax treatment of the acquisition of garage spaces presents technical nuances that determine the final tax burden for the buyer. The Dirección General de Tributos (DGT) has specified how the leasing history of the space influences the application of Value Added Tax (IVA).

What the DGT has resolved

The ruling establishes that the nature of the purchase and sale operation of a garage space varies according to the status of the previous lessee:

• Second delivery: If the garage space has been leased for a period exceeding two years to a person other than the acquirer, the operation is classified as a second delivery. In this scenario, the sale is subject to but exempt from IVA.
• First delivery: If the lessee of the space was the acquirer themselves, the operation is considered a first delivery, which implies that it is subject to and not exempt from IVA.

Furthermore, the regulations allow the acquirer to waive the tax exemption if they are entitled to deduct the tax.

What it means for you

This criterion directly impacts the economic settlement of the transaction. For an individual, this determines whether the purchase price includes IVA or if the operation is exempt. For a company, the relevance is greater, especially if acting as a developer or if the acquirer is a taxable person with the right to deduct the tax, as the choice between exemption or taxation will affect their ability to recover the tax incurred.

What is advisable to do

When intending to acquire a garage space, it is necessary to verify the leasing history of the property to foresee the fiscal cost of the operation. It is fundamental to analyze whether the acquirer has the right to deduct IVA, as this opens the possibility of waiving the exemption to avoid the financial impact of non-deductible tax. It is recommended to assess each particular situation to determine the most appropriate tax option according to the buyer's profile.