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V0342-21 24 February 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · valor de adquisición

Home improvements and extensions may increase acquisition value for Income Tax purposes

A taxpayer inquired whether costs from renovation work on their home could be added to the acquisition value to reduce capital gains tax upon sale. The Directorate General for Taxes (DGT) ruled that only works resulting in an improvement or extension of the property's capacity or useful life are includable, excluding repair and maintenance expenses.

The question raised

Question raised: Classification of said expenses to determine the acquisition value of the dwelling for the purposes of Personal Income Tax.

The DGT's ruling

The acquisition value includes the cost of investments and improvements made to the asset. Works that increase the capacity, habitability, or useful life of the property are considered improvements or extensions. Repair and maintenance expenses intended to maintain the normal use of the asset do not form part of the acquisition value. In community works, each owner must allocate the portion corresponding to their participation quota.

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