Back to index
V4982-16 17 November 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancia patrimonial

Improvements increasing rural property productivity are included in its acquisition value

A taxpayer has requested clarification on how to determine capital gains resulting from the donation of rural properties where improvement works were carried out. The Directorate General of Taxes (DGT) has ruled that if such works increase capacity or productivity, they are integrated into the acquisition value.

The question raised

Taxation of the capital gain for the donor under Personal Income Tax, determination of the portion of the capital gain corresponding to the improvement made.

The DGT's ruling

If the properties are used for economic activities and the works increase their productive capacity, the costs are incorporated into the asset as an increase in the value of the property pursuant to Article 35.1.b) of the Personal Income Tax Law (LIRPF). The capital gain shall be determined by breaking down the transfer value according to the normal market value of the land and the improvements at the time of disposal. The ninth transitional provision does not apply if the properties are used for economic activities.

Book your free first meeting