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V1263-19 4 June 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias y pérdidas patrimoniales

Property damage and legal or expert fees cannot be deducted as capital losses

A taxpayer inquired whether damage to their properties and the costs of lawyers and experts could be treated as capital losses for Personal Income Tax (IRPF) purposes. The Directorate General for Tax (DGT) ruled that property damage does not alter the composition of assets and that professional fees are classified as consumption expenses.

The question raised

Consideration as a capital loss of the damage suffered to the farmhouse, estates, and access roads, and of the expert and legal fees paid in defense of their interests.

The DGT's ruling

Damage to real estate does not constitute a capital loss because the composition of the assets remains unchanged, as the assets continue to exist despite having a lower value. Regarding expert and legal fees, these cannot be computed as capital losses as they constitute consumption income for the taxpayer.

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