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V3481-15 12 November 2015 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias patrimoniales

Compensation for repairs and rent is taxed as capital gains, except for moral damages

A taxpayer has requested clarification on how compensation for repair costs, house rental, and moral damages is taxed under Personal Income Tax (IRPF) following a lawsuit for construction defects. The Directorate General of Taxes (DGT) has ruled that the first two categories are classified as capital gains, while the latter is exempt from tax.

The question raised

In the event of obtaining a favorable judgment, the question is raised regarding the taxation in Personal Income Tax (IRPF) of the aforementioned concepts.

The DGT's ruling

Compensations for repair costs and housing rental are classified as capital gains pursuant to Article 33.1 of Law 35/2006. In the case of repairs, there shall be no gain if the amount coincides with the cost thereof. Compensations for non-pecuniary damages are exempt as they constitute civil liability for personal injury pursuant to Article 7.d) of Law 35/2006.

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