Sale of inherited property: obligation to declare capital gains

Managing assets received through inheritance involves specific technical complexity in calculating the tax burden for Personal Income Tax (IRPF). A recent ruling from the Directorate General of Taxes (DGT) has clarified the treatment of capital gains when a share of ownership in an inherited property is sold.

What the DGT has ruled

The DGT establishes that the sale of a share of ownership in a property generates a capital gain or loss. This result is obtained by calculating the difference between the acquisition value and the transfer value.

• Acquisition value: In transfers for consideration (gratuitous transfers), such as inheritances, this value is the market value on the date of death, increased by the inherent expenses and investments paid by the acquirer.
• Transfer value: This is the actual amount of the disposal, from which the inherent expenses and taxes paid by the transferor must be deducted.

A key point of the criteria is that the obligation to declare this capital gain persists in its entirety, even if the heir subsequently makes a donation of said gains to a third party.

What this means for you

If you are an individual who has acquired a property through inheritance and decides to sell it, you must calculate the tax profit or loss based on the value the property had at the time of death. It is fundamental to understand that any subsequent movement, such as a donation of the profits obtained, does not exempt you from the obligation to declare the gain derived from the original sale. The regulations of the LIRPF and the TRLRHL strictly govern this calculation.

What you should do

In an operation of this type, it is necessary to accurately document both the market value on the date of succession and all expenses and investments made since the acquisition. Since the existence of subsequent donations does not eliminate the tax obligation for the sale, it is necessary to assess each situation individually to ensure that the calculation of the acquisition and transfer value is correct in accordance with the General Tax Law.