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V1777-22 27 July 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · valor de adquisición

Mortgage cancellation costs and home improvements increase acquisition value

A taxpayer has enquired whether mortgage cancellation fees, repairs, and the depreciation of furniture are deductible. The Tax Agency has clarified that mortgage cancellation costs and improvements or extensions constitute part of the acquisition value, whereas repairs do not.

The question raised

It is requested to determine whether mortgage cancellation expenses constitute an increase in the acquisition value, whether the aforementioned repair expenses are classified as repair and maintenance expenses or improvements, and the period for which movable assets provided with the property may be depreciated for Personal Income Tax purposes.

The DGT's ruling

Notary and registry fees for the cancellation of the mortgage are expenses inherent to the acquisition. Works that increase the capacity, habitability, or useful life of the property are considered improvements or extensions and are computed as part of the acquisition value. Repairs intended to maintain the useful life or capacity of use do not form part of said value. Movable assets provided with the property are depreciated using coefficients from the simplified table, with a maximum of 10% annually and 20 years.

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