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V2832-17 2 November 2017 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · división horizontal

Taxable base for horizontal division via expansion includes new construction costs and corresponding land value

A query was raised regarding how to determine the tax base for Stamp Duty (AJD) when a new construction is declared and the horizontal division of a building is modified to include an unregistered element. The Directorate General for Tax (DGT) ruled that both agreements must be taxed separately and that the tax base should only consider the newly added element.

The question raised

Whether the tax base for the Tax on Documented Legal Acts regarding the expansion of a horizontal division corresponds to the value of the work being expanded plus the proportional value of the land or, conversely, whether it corresponds to the total value of the building (the value of all the land plus the value of the entire construction).

The DGT's ruling

The declaration of new construction is taxed based on the actual cost value of the new construction being declared. In the establishment of buildings under a horizontal property regime, the tax base includes the actual cost value of the new construction and the actual value of the land. When adding an element, the tax base of the new construction shall be the cost of said element, whereas in horizontal division, the cost of that element shall be added to the value of the corresponding land.

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