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V1510-24 20 June 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · expropiación forzosa

Tax treatment of compulsory purchase compensation depends on ownership at the time of occupation

Consultants purchased a property under an agreement to receive 50% of the compensation from the compulsory purchase of community land. The DGT clarifies that any capital gain or loss must be attributed to the person who held ownership at the time the property was occupied.

The question raised

Treatment in the Personal Income Tax of the aforementioned amount.

The DGT's ruling

Transfer by means of expropriation generates a capital gain or loss that must be attributed to the person who was the owner of the land at the time of occupation. If the buyers were not owners at the time of occupation, the compensation does not affect their income, but the agreed payment to the seller reduces their acquisition value. If the occupation occurred after the purchase, the buyer attributes the gain and the payment to the seller increases their acquisition value.

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