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V1793-18 21 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Irrigation systems are deductible via depreciation, while land levelling is added to land value

An agricultural landowner has enquired whether the costs of installing a new irrigation system and levelling the land are deductible. The DGT has ruled that the irrigation system constitutes an improvement deductible through depreciation, whereas land levelling is considered an improvement that increases the value of the land and is therefore not depreciable.

The question raised

Deductibility of the expenses incurred.

The DGT's ruling

The works are classified as repair and maintenance (deductible expense) or as improvements (deductible via depreciation). The installation of the irrigation system is an improvement deductible through the depreciation of movable property according to the coefficient of the simplified table. The leveling of the terrain is an improvement that must be incorporated into the acquisition value of the land, and therefore is not depreciable as the value of the land is not included in the calculation of real estate depreciation.

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