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V1478-20 20 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · pérdida patrimonial

Payment for boundary agreement is not a capital loss, but increases acquisition value

A property owner paid a sum to a neighbour to resolve a dispute regarding estate boundaries and avoid litigation. The DGT has ruled that this payment does not constitute a capital loss for Personal Income Tax (IRPF) purposes.

The question raised

Whether the payment of said amount is considered a capital loss for the taxpayer under Personal Income Tax.

The DGT's ruling

The amount paid through a settlement agreement to resolve boundary disputes is not considered a capital loss. However, said amount shall form part of the acquisition value of the property, pursuant to Article 35.1.b) of the Personal Income Tax Law.

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