Debt write-offs generate a capital loss in the general base of Personal Income Tax (IRPF)

The Directorate General of Taxes (DGT) has issued a relevant criterion regarding the tax treatment of the capital loss that occurs when a creditor accepts a write-off to extinguish a debt. This scenario, frequent in debt restructuring processes, raises the question of whether such a loss should be treated as a capital gain or loss from savings or integrated into the general taxable base.

What the DGT has resolved

The query concerned the possibility of declaring a capital loss for an amount of 200,000 euros, derived from a write-off and the waiver of shares to recover the remaining amounts lent. The DGT has determined that the write-off agreed upon between creditor and debtor, in which a payment lower than the amount owed is agreed upon to extinguish the obligation, generates a capital loss for the amount not collected.

The criterion establishes that, as it derives from the extinction of a credit right and not from the transfer of assets, this loss must be integrated as general income into the taxable base, in accordance with the provisions of Article 45 of Law 35/2006.

What it means for you

For individuals acting as creditors who are forced to accept a reduction in debt to close a position, the tax impact is not what is usually associated with losses in the savings base. Since there is no transfer of an asset (such as real estate or shares), but rather the extinction of a credit right, the loss is not deducted from the savings taxable base, but is instead integrated into the general taxable base.

What should be done

In a situation involving a debt write-off, it is necessary to analyze the legal nature of the extinction of the right to determine its correct integration into the IRPF tax return. Since the tax treatment depends on whether a transfer occurs or a mere extinction of credit, it is fundamental to assess each particular case to ensure that the loss is imputed to the corresponding taxable base according to current regulations.