Unlike other economic activities, property rental has been subject to certain requirements in order to be considered as such for tax purposes, which we will discuss below.
For Income Tax, according to Article 27 of the LIRPF, property rental is considered an economic activity when it is carried out by at least one person employed under a full-time employment contract. However, it is worth noting that it will be necessary to prove to the Tax Agency that the employee has a sufficient workload. Currently, the legislation is more permissive, no longer requiring the need to have premises used exclusively for the management of the rental of the property.
Therefore, if the aforementioned requirement is not met, the income obtained from the lease would be declared in the income tax return as income from real estate capital, in addition to being taxed for imputation of income for the period of the year not rented, while if it is met, it would be taxed for economic activities.
In relation to Corporate Income Tax, currently, in accordance with Article 5 of the LIS, the legislation requires the same measures as the previous tax, while in Value Added Tax, without the need for any additional requirements, the leasing of real estate is considered in itself an economic activity. This can be seen in Article 5 of the LIVA, which states, among the concepts of entrepreneur, “those who carry out one or several supplies of goods or services that involve the exploitation of a tangible or intangible asset with the aim of obtaining continuous income over time”.
On the other hand, it will be particularly relevant in Wealth Tax and Inheritance and Gift Tax whether or not the leasing of real estate is determined as an economic activity in Personal Income Tax, given that it will allow access or not to certain tax benefits in certain autonomous communities, such as the 99% reduction in Inheritance and Gift Tax in the Autonomous Community of Andalusia, for holdings in family businesses.
The latter demonstrates the importance of good tax planning to optimise the future tax burden, which is why, from our office, we advise you to consult a professional to study your case.
Isabel María Diaz Rubio.
