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V1561-24 26 June 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Improvement or expansion works are included in the acquisition value and are not deductible as repair expenses

The taxpayer asks how to classify renovation works in properties intended for rent. The DGT clarifies that improvements or expansions increase the acquisition value of the property, whereas repairs and maintenance are deductible as expenses against income from real estate capital.

The question raised

Classification of said expenses for the purposes of Personal Income Tax.

The DGT's ruling

Works that increase the capacity, habitability, or useful life of the property are considered improvements or extensions and form part of the acquisition value. Repairs and maintenance, intended to maintain normal use, are deductible from the income from real estate capital. For repair expenses carried out prior to the rental to be deductible, they must be aimed exclusively at the future obtaining of income and not at the enjoyment of the owner. The deductibility of these expenses is limited to the amount of the gross income obtained, and any excess may be offset in the following four years.

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