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V4867-16 11 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Compensation for construction defects is taxed as a capital gain or loss for Personal Income Tax purposes

A taxpayer inquired about the taxation of judicial compensation received for construction defects in a property. The Directorate General for Taxes (DGT) ruled that it must be classified as a capital gain or loss.

The question raised

Taxation of the compensation in the Personal Income Tax (IRPF).

The DGT's ruling

The compensation is considered a variation in the value of the assets pursuant to Article 33.1 of Law 35/2006. The difference between the amount received and the proportional part of the acquisition value corresponding to the damage is calculated. If the compensation coincides with the cost of the repairs, no capital gain or loss occurs.

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