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V1336-23 18 May 2023 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · valor neto patrimonial

Tax on the increase in value of urban land arising from the inheritance itself is not deductible

A query was raised regarding whether the tax liability for the Tax on the Increase in the Value of Urban Land (municipal capital gains tax) generated by the acquisition of real estate due to death is deductible for Inheritance Tax purposes. The DGT ruled that it is not, as it constitutes a debt of the heir rather than the deceased.

The question raised

Law 29/1987 art. 13 and 14. RISD RD 1629/1991 art. 32 and 33

The DGT's ruling

In Inheritance and Gift Tax, only debts incurred by the deceased and expenses provided for by law are deductible. The tax liability for the Increment in the Value of Urban Land corresponding to the acquisition by reason of death is a debt of the successor (heir or legatee) and not of the deceased. Therefore, it is not deductible in Inheritance Tax. It would only be deductible if it were a debt of the deceased that had already been left pending payment.

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