Instrumental real estate is a category of assets characterized by a particular destination and a specific economic utility. Today we will see what capital properties are and what their tax treatment is.
CLASSIFICATION OF INSTRUMENTAL REAL ESTATE
According to the Consolidated Income Tax Law (art. 43, paragraph 2, Presidential Decree 917/1986) "For income tax purposes, real estate used exclusively for the exercise of art or profession or commercial enterprise by the owner is considered instrumental". Instrumental real estate is divided into two macro-categories:
* instrumental real estate assets by destination (regardless of the nature and characteristics of the asset)
* real estate assets instrumental by nature
REAL ESTATE ASSETS USED FOR BUSINESS PURPOSES
Integrating what is already provided for by the Tuir, the Revenue Agency (Circular 26/E of June 1, 2016) qualifies "instrumental by destination" the properties that have as their sole use to be "directly used" in the performance of typical business activities: what matters is the functional link of the property to the purpose pursued.
They are, for example, instrumental real estate used in the company, understood as "the complex of assets organized by the entrepreneur for the exercise of the enterprise" (art. 2555 Civil Code), as well as in the agricultural company. Real estate assets used by the entrepreneur, "whoever professionally carries out an economic activity and organizes it for the purpose of producing and exchanging goods and services" are also instrumental (art. 2082), when connected to the business activity.
For similar reasons, the character of the instrumentality subsists also with respect to the real estate used by the small entrepreneur for the exercise of the agricultural activity (we think, for example, to the constructions for the protection of the plants and the animals, to the agriturismi, etc.).
INSTRUMENTAL REAL ESTATE BY NATURE
Real estate is considered instrumental "by nature" if it is not susceptible to a different use without a radical transformation and if its use results from an administrative authorization. The instrumental real estate by nature are, therefore, formally identified on the basis of the mere membership of the following cadastral categories, regardless of the actual mode of use of the asset:
* A/10 offices and private studies
* B: property intended for services (schools, nursing homes, public offices)
* C: commercial properties and appurtenances (stores, warehouses, laboratories, garages)
* D: real estate for special use (hotels, theaters, credit institutions, bathing establishments)
* E: real estate of special destination (fortifications, forts, bridges)
GENERAL TAX REGIME
The instrumental buildings have a different tax relevance than residential real estate, intended to meet a predominantly residential need.
For the purposes of the application of income tax, the following are not considered productive of landed income:
* property relating to commercial enterprises
* property used for the exercise of arts and professions. Property instrumental "by nature" is, instead, subject to Irpef, Ires and Imu.
With sentence no. 262 of December 4, 2020, the Constitutional Court declared the unconstitutionality of the rule that provides for the non-deductibility of Imu at 100% from the business income.
In particular, it would be unconstitutional the non-deductibility from the taxable income of Ires and Irpef taxes of the tax paid on instrumental real estate for "violation of the principle of consistency, and therefore of reasonableness (articles 3 and 53 of the Constitution)".
Total deductibility will only be allowed from 2022.
Unfortunately, instrumental real estate does not enjoy the deductions granted in case of building renovation, which are reserved for residential real estate, except for the possibility of deducting the expenses incurred for the renovation of the common parts (leading interventions) if the real estate unit is located within a residential condominium.
For instrumental real estate in relation to the business or professional activity is, instead, possible to deduct (65%) for IRPEF or IRES the expenses incurred for energy efficiency (ecobonus).
TAX REGIME IN CASE OF TRANSFER
As for residential property, the tax regime for capital property also changes depending on the subjective requirements and the recurrence of legal prerequisites.
* sale made by a construction company within 5 years of completion of works (the works may not be completed but the ordinary use must remain)
* sale made by a construction company after 5 years from completion of the works (the works may not be completed but the ordinary use must remain) and the transferor exercises the VAT option
* sale by a company that has carried out building renovation work
* sale by a company that has not carried out building or renovation work if the transferor exercises the VAT option
b) 10% for Tupini buildings (l. 408/1949), i.e. properties consisting of both residential units and stores and offices in compliance with certain proportions
- registration tax (200 euros)
- mortgage tax 3% (minimum 200 euros)
- cadastral tax 1% (minimum 200 euros) If the transferee is subject to VAT, the reverse charge applies: the obligation to pay VAT is transferred from the transferor to the purchaser.
Abroad, real estate used for business purposes are subject to Ivie (Tax on the value of real estate abroad).
* if the transfer is made by a builder or by a company that has carried out building renovation work after 5 years from completion of the work and the transferor does not exercise the VAT option
* sale by a company that is neither a builder nor a renovator if the transferor does not exercise the VAT option
- registration tax (200 euros)
- 3% mortgage tax (minimum 200 euros)
- 1% cadastral tax (minimum 200 euros)
Outside the VAT field
This is the tax regime applicable in the hypothesis of sale by a private individual
- registration tax 9%
- 50 euros mortgage tax
- cadastral tax 50 euros If you opt for the flat-rate regime, the purchase of capital goods benefits from a tax credit within the limits of the ceiling (Article 1, paragraph 186, Finance Act 2020).
TAX REGIME IN CASE OF LEASE
Since June 26, 2012, instrumental property has been subject to the natural VAT exemption regime.
However, any taxable person may opt, as lessor, for the VAT regime (22%) to which the registration tax (1%) is added, for the entire duration of the contract, unless it is possible to change regime upon renewal.
In the letting of properties by construction companies, properties used "by nature" are subject to a proportional registration tax of 1%, regardless of whether the rental is subject to VAT or exemption.
This is an exception to the principle of alternating VAT and registration tax.
When the lessor of capital properties is a private individual, only registration tax is applied (2%, not less than 67 euros for the first year).
TAX REGIME IN THE CASE OF FINANCE LEASES
The leasing contract, otherwise known as "leasing" is a three-way contract for consideration in which the lessor (financial intermediary), against payment of a periodic fee, grants the user (the company concerned) the use of an asset purchased, built or constructed by a third party (seller, builder) on commission from the lessor and indication of the user. At the end of the leasing period the user-lessee can redeem the asset by acquiring ownership. When an instrumental property "by nature" (A/10, B, C, D and E) is the subject of a leasing contract, the following tax treatment is applied:
* General VAT exemption regime, unless the option to apply the tax is exercised (with reverse charge on redemption), provided that the lessor expressly exercises the option in the lease agreement;
* Application of a fixed amount of registration tax (200 euros).
The tax is applied only in the event of use or of a contract drawn up by public deed or notarized private deed
* Registration, mortgage and cadastral duties are applied at a fixed rate when the asset is redeemed.
Lease payments relating to depreciable capital goods are deductible from business income provided that the contractual duration complies with the minimum duration provided for by law (12 years for real estate according to the provisions of Law 147/2014).
Instrumental real estate does not enjoy the benefit of the coupon secca.
The 2019 Budget Law (l.145/2018) provided, for leases stipulated in 2019, the application of the coupon also for commercial properties falling within the C/1 cadastral category with a surface area of up to 600 square meters, excluding appurtenances.
Unfortunately, in 2020, contrary to expectations, the concessional taxation regime for commercial premises has not been renewed, nor has the 2021 Budget Law accepted the extension of the benefit to other categories (bars, restaurants, stores).
Knowing the tax regime of capital goods is important to assess the convenience of a real estate transaction. If you are looking for a property for your professional or commercial activity, contact us without delay.
We will guide you in the most appropriate choice for your needs.