Taxation of capital gains or losses from the sale of a non-habitual residence

The transfer of real estate that does not qualify as a habitual residence carries direct tax implications for Personal Income Tax (IRPF). The Directorate General of Taxes (DGT) has specified the elements that must constitute the acquisition and transfer values to determine the capital result of the transaction.

What the DGT has resolved

The tax authority establishes that the transfer of a property generates a capital gain or loss resulting from the difference between the acquisition value and the transfer value. For correct calculation, the following criteria must be observed:

• Acquisition value: Includes the actual purchase amount, investments, improvements, and expenses or taxes inherent to the acquisition, after deducting the corresponding depreciation.
• Transfer value: Is the actual amount of the disposal, provided that it is not lower than the market value. From this amount, the expenses and taxes inherent to the sale paid by the transferor must be deducted.

Finally, the resulting amount is included in the savings tax base, in accordance with the provisions of Article 49 of the IRPF Law.

What it means for you

If you are an individual and proceed to sell a property that is not your habitual residence, the tax impact will depend on the correct determination of the associated costs. It is not enough to consider the purchase and sale price; it is necessary to include all investments and expenses that increase the acquisition value, as well as the expenses derived from the sale, provided that legal requirements are met. An erroneous determination of these values could lead to an incorrect tax base in your income tax return.

What you should do

In an operation of this type, it is necessary to collect all documentation that proves the expenses, taxes, and investments made during ownership. The correct application of current regulations allows for the accurate reflection of the real capital gain or loss. Since each situation presents particularities regarding deductible expenses and depreciation, it is fundamental to assess each case individually to ensure compliance with tax regulations.