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V0168-18 29 January 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Property improvements and extensions are included in the acquisition value for capital gains tax calculations

A query was raised regarding whether renovation works carried out on a property can be deducted when calculating capital gains or losses upon its sale. The Directorate General for Taxes (DGT) ruled that only investments and improvements that increase the capacity, habitability, or useful life of the asset are deductible, excluding repair and maintenance expenses.

The question raised

Deductibility for the purposes of calculating gain or loss

The DGT's ruling

The acquisition value includes the actual purchase price, investments and improvements, and the expenses and taxes inherent to the acquisition. Repair and maintenance works, such as the replacement of tiling, do not form part of the acquisition value. Improvements or expansions are those that increase the capacity, habitability, or useful life of the property. The taxpayer must justify the nature of the works through means of proof admitted in Law.

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