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V3257-20 30 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Repair works are deductible, while improvements are depreciated by increasing the property value

A taxpayer inquired whether renovation works on rental properties qualify as deductible repair expenses or depreciable improvements. The DGT clarified that repairs intended to maintain normal use are deductible, whereas improvements that increase capacity, habitability, or useful life are considered capital investments.

The question raised

It is asked whether said works are considered repair and maintenance for potential deduction or improvements for potential depreciation. In the event they are improvements, the procedure for their depreciation is requested.

The DGT's ruling

Repair and maintenance expenses, intended to maintain the normal use and useful life of the property, are deductible up to the limit of the gross income obtained. Works that result in an increase in capacity, habitability, or an extension of the useful life are considered an expansion or improvement, increasing the acquisition value. The latter are deducted through depreciation, applying an annual rate of 3 percent to the cost of the works pursuant to Article 14 of the RIRPF.

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