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V1903-18 27 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Home improvements or extensions may be added to acquisition value for capital gains tax calculations

A taxpayer queried whether renovation works carried out on a property can be included when calculating capital gains tax upon its sale. The Directorate General for Taxes (DGT) ruled that only works classified as improvements or extensions may be included, whereas simple repair or maintenance costs cannot.

The question raised

Calculation of capital gains

The DGT's ruling

Works that increase the capacity, habitability, or useful life of the property are considered improvements or extensions and may be integrated into the acquisition value. Conversely, repair and maintenance expenses intended to maintain the useful life or capacity of use do not form part of said value. The nature of the works must be justified by invoices that comply with legal requirements.

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