Acquisition value of inherited real estate for depreciation calculations

The calculation of depreciation in income from real estate capital is a key element in determining the taxable base for Personal Income Tax (IRPF). A recurring question arises when the property is not acquired through a sale and purchase, but through succession.

What the DGT has resolved

The Directorate General of Taxes (DGT) has specified how the acquisition value must be determined in cases of acquisitions for gratuitous reasons, such as inheritance. The criteria establish that the acquisition value consists of the value of full ownership resulting from the application of the rules of Inheritance and Gift Tax, provided that this amount does not exceed the market value.

Furthermore, the resolution indicates that the following concepts must be added to said base value:

• Investments made in the property.
• Improvements carried out.
• Expenses inherent to the acquisition.
• Taxes inherent to the acquisition.

It is important to highlight that interest should not be included in this calculation.

What it means for you

If you have inherited a property and it generates real estate income, you cannot use any figure to calculate depreciation. You must rely strictly on the value declared in Inheritance and Gift Tax, respecting the market value limit. This value will be the basis upon which the corresponding depreciation coefficient is applied to reduce the taxable base of your income.

This criterion directly affects individuals managing real estate assets obtained free of charge, ensuring that the depreciation base is consistent with the tax valuation of the transfer.

What you should do

It is necessary to verify that the value used for depreciation matches the value of full ownership declared in the settlement of Inheritance and Gift Tax. Likewise, all invoices for improvements, investments, and tax expenses intended to be added to the acquisition value should be collected and kept to avoid discrepancies with the Tax Administration. Since every wealth situation presents particularities, it is fundamental to assess your specific case.