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V0585-22 21 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · valor de adquisición

Home improvements and extensions may be added to the acquisition value for capital gains tax calculations

A taxpayer inquired whether the cost of a full home renovation could be included in the acquisition value for Personal Income Tax (IRPF) purposes. The Directorate General for Taxes (DGT) ruled that only investments and improvements may be included, whereas repair and maintenance expenses are excluded.

The question raised

Whether the cost of the aforementioned renovation forms part of the acquisition value of the dwelling for the purposes of calculating the capital gain in Personal Income Tax.

The DGT's ruling

The acquisition value includes the actual purchase price, investments and improvements, and the expenses and taxes inherent to the acquisition. Improvements or expansions are those that increase the capacity, habitability, or useful life of the property. Conversely, repair and maintenance expenses intended to maintain normal use do not form part of the acquisition value. The classification of the work and its accreditation are matters of fact that must be proven before the Administration.

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