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DEDUCTION OF PROPERTY TAX IN FINANCIAL AND OPERATIONAL LEASING AGREEMENTS

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DEDUCTION OF PROPERTY TAX IN FINANCIAL AND OPERATIONAL LEASING AGREEMENTS

Income tax

Through its Revenue Ruling No. 000286 of 2018, the Tax Administration clarified who is entitled to compute the property tax as tax deductible in cases of leasing agreements

  

Due to the doubt expressed by a taxpayer, the Colombian Tax Administration clarified that in the case of financial leasing agreements, the owner or holder of the property is the person entitled to compute the property tax as tax deductible. According to the Tax Administration, the lessee could request the property tax as a deduction, only if at the end of the agreement the property is acquired.

On the other hand, in case of operational leasing agreements, the Colombian tax administration established that it would be the lessor the person entitled to compute the property tax as tax deductible.

It is important to remember that in order to compute the property tax as tax deductible for income tax purposes, it is required that the owner of the property has paid it effectively and has a causal relationship with the economic activity.