Through the publication of new regulations regarding Income Tax, the authorities have established a new option for making lease payments deductible for dwellings.

Among the changes carried out we find that the requirement for having the authorization from the authorities to be able to deduct the aforementioned items has been eliminated.    

It establishes that a notice must be filed under oath in which the information that is submitted is true and reflects the facts, actions, and transactions of the taxpayer.     The notice must be filed in the Tax Administration Service [in Spanish: el Servicio de Administración Tributaria] no later than the last day of the tax year in which you expect to apply the deduction for the first time.

The requirements that allow for the aforementioned deduction are:

• * A copy of the lease agreement.
• * A comparative study between the expenditures incurred during the last tax  year with respect to the Tax Administration Service or for lodging, and the estimated expenditures during the tax year for the leased dwellings.
• * Documentation that confirms the time stayed by individuals in the said property (copy of electricity, phone, or water bill, etc.).

To claim a deduction in the following tax years, the taxpayer must keep that part of the accounting documents that proves that the assets are used exclusively for the activity.     

The change that has been referenced to in this newsletter is a simplification measure upon which authorization from the authorities is not necessary. Nevertheless, we must comply with all tax requirements that apply to any expense.