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V1114-19 21 May 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · resolución contractual

Cancellation of property sale requires repayment of tax deduction and taxation of compensation and interest as capital gains

Taxpayers judicially rescinded a property purchase due to a lack of licence. The DGT has issued a ruling on how the restitution of the purchase price, compensation for damages, and legal interest must be taxed.

The question raised

Question posed: Taxation under Personal Income Tax (IRPF).

The DGT's ruling

The contractual resolution with restitution of benefits does not generate a capital gain or loss as it returns to the initial state. However, the right to the deduction for investment in the primary residence is lost, and the amounts unduly deducted must be repaid. Compensation for damages is considered a capital gain integrated into the general tax base. Legal interest, due to its compensatory nature, is taxed as a capital gain integrated into the savings tax base.

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