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V1611-22 4 July 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Building demolition costs treated as increased acquisition value of land

A taxpayer inquired whether the costs of demolishing a property and clearing debris can be added to the land's acquisition value to calculate capital gains. The Directorate General for Taxes (DGT) ruled that these expenses constitute investments and improvements that increase the value of the land.

The question raised

Request to determine whether demolition costs constitute an increase in the value of the land for the purpose of calculating capital gains or losses in Personal Income Tax.

The DGT's ruling

The demolition costs of the building incurred by the taxpayer correspond to the concept of investments and improvements. Therefore, they constitute an increase in the acquisition value of the land for the purposes of its transfer, in accordance with Article 35 of the Personal Income Tax Law.

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