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V3506-20 9 December 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Calculating the 3% depreciation on acquisition cost when no cadastral value exists

A taxpayer inquired how to calculate the depreciation for two properties in the United Kingdom that share a plot and lack a cadastral value. The Directorate General for Taxes (DGT) ruled that depreciation is calculated by applying 3% to the higher of either the cadastral value (excluding land) or the acquisition cost (excluding land).

The question raised

1.- In the absence of cadastral valuations in the United Kingdom, calculation of the depreciation expense.

The DGT's ruling

To determine the deductible depreciation of a property, 3% is applied to the higher of two values: the cadastral value (excluding land) or the acquisition cost paid (excluding land). If the value of the land is unknown, it shall be calculated by prorating the acquisition cost between the cadastral values of the land and the construction. Common plot expenses cannot be allocated solely by area, as the criterion depends on the nature of each expense.

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