Taxpayers must use the value verified by the Autonomous Community for Personal Income Tax

Determining the actual acquisition amount of a property is a critical aspect when declaring the sale of a property in Personal Income Tax (IRPF). A recent resolution from the Dirección General de Tributos (DGT) clarifies which value a taxpayer must use when the regional administration has intervened in the valuation of the original purchase.

What the DGT has ruled

The inquiry addresses the situation of a taxpayer who must declare the transfer of a garage space. The core of the debate lies in whether the acquisition value for IRPF should be the price agreed upon in the deed or the value determined by the Autonomous Community after conducting a value verification for Transfer Tax (ITP).

The DGT has ruled that the acquisition value must include the actual purchase amount along with inherent expenses and taxes. Following the jurisprudence of the Supreme Court, if the regional authority performs a value verification and determines an amount higher than the one declared, that verified value is what must be considered the actual amount for calculating the capital gain or loss in IRPF.

Furthermore, the resolution reminds that the transfer value shall be the actual sale amount, provided that it is not lower than the normal market value.

What this means for you

If you are an individual selling a property (or a garage space) and the Autonomous Community rectified the value of the original purchase at the time, you cannot use the price appearing in your purchase agreement to reduce the capital gain in IRPF.

This implies that if the regional administration increased the acquisition value for ITP, that new value is the one you must apply. Using an acquisition value lower than the one verified by the authority could lead to an incorrect tax settlement and potential penalties from the Tax Agency.

What you should do

When selling a real estate asset, it is necessary to verify whether the original purchase was subject to a value verification by the regional administration. In the event that there is a rectification of the acquisition value, you must ensure that the calculation base for the capital gain in IRPF reflects said verified value and associated expenses, thereby guaranteeing the accuracy of the tax return.