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V0581-22 21 March 2022 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · base imponible

Costs of property improvements cannot be deducted from the taxable base of a gift

A person who financed interior design works for their parents' home has asked whether these costs can be deducted from the value of the gift. The Directorate General for Taxes (DGT) has ruled that the taxable base must be determined according to regulations, without excluding the amount paid for such improvements.

The question raised

Whether it is possible to consider as the tax value of the gift the difference between the market value and the cost of the works paid for by the consultant.

The DGT's ruling

The taxable base for Inheritance and Gift Tax is determined according to Article 9.3 of the LISD. It is not possible to exclude from said taxable base the amount that the donee has paid for improvements made to the real estate property. By accession, the real estate property belongs to the parents with all improvements incorporated.

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