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V0312-25 17 March 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · valor de adquisición

Extensions or improvements can be added to acquisition value for calculating capital gain

The consultant asks whether installing a fence and retaining wall on a plot counts as improvements for capital gain or loss calculation. The DGT states that if the works are extensions or improvements, they are included in the acquisition value; if they are repairs or conservation, they are not.

The question raised

It requests to know whether said expenses are considered improvements for the purpose of calculating the potential capital gain or loss upon transfer for Personal Income Tax purposes.

The DGT's ruling

Works that increase the capacity, habitability, or useful life of the property are considered extensions or improvements and form part of the acquisition value. Conversely, repair and maintenance expenses intended to maintain the useful life or capacity of use are not included in said value. The taxpayer must justify the nature of the works and the disbursements through invoices that comply with legal requirements.

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