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V0588-25 1 April 2025 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias y pérdidas patrimoniales

Insurance compensation for damage or destruction may not create profit or loss

A taxpayer asks how to tax insurance compensation after a flood in their non-residential property. The DGT explains that taxation depends on whether the compensation covers repair costs or involves the destruction of assets.

The question raised

Taxation of compensation under Personal Income Tax.

The DGT's ruling

If the compensation coincides with the repair cost, there is no capital gain or loss. In the event of destruction, the difference between the compensation and the acquisition value, reduced by the depreciation due to use in durable consumer goods, is calculated. A gain is only calculated if there is an increase in the value of the assets.

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