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V2374-22 16 November 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Improvements made to a property may be included in its acquisition value

A taxpayer has enquired about calculating capital gains when selling land acquired in 1988 that subsequently had a tennis court built on it. The DGT clarifies that improvements increase the acquisition value, but must be distinguished from repair expenses.

The question raised

Calculation of the capital gain in the Personal Income Tax and application of the ninth transitional provision of the Law.

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. Conversely, repair and maintenance expenses are not included in said value. As there are improvements, it is necessary to distinguish the portion of the disposal value corresponding to each component. The portion of the gain on the land may benefit from the reduction provided by the ninth transitional provision of the Personal Income Tax Law.

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