The acquisition value of a self-built home includes the land and construction

Determining the acquisition value of a property is a critical step in correctly calculating the capital gain or loss that occurs when selling a property. In the case of homes built through self-promotion, determining this cost can present technical complexities that the Dirección General de Tributos (DGT) has recently clarified.

What the DGT has resolved

The DGT has established that the acquisition value of a self-built home is composed of three fundamental elements:

• The actual amount of the land: the effective cost of the plot on which the house is built.
• The cost of construction works: the total expense derived from the execution of the home.
• Inherent expenses and taxes: all those costs linked to both the acquisition of the land and the subsequent declaration of new building.

Furthermore, the ruling indicates that, in a self-promotion scenario, it is the taxpayer's responsibility to reliably prove the cost of construction. Regarding the moment of acquisition, the date will be set at the completion of the works or, if such a date cannot be proven, at the date of the deed of declaration of new building.

What this means for you

If you are an individual who has built your own home on a plot of land, this criterion directly impacts your future tax burden when selling the property. A correct calculation of the acquisition value allows for a reduction in the taxable base of the capital gain in Personal Income Tax (IRPF), avoiding excessive tax payments due to an erroneous valuation of the construction cost.

It is fundamental to understand that an estimate is not enough; the regulations require that every euro invested in construction and associated expenses be duly documented so that the Tax Agency (Hacienda) recognizes it as part of the acquisition value.

What you should do

To ensure the correct determination of the acquisition value, it is necessary to maintain an exhaustive record of all documentation related to the project. This includes invoices for materials, construction service contracts, proof of tax payments, and documentation relating to the declaration of new building. The ability to prove the date of completion of the works or the date of the deed will be decisive for calculating the holding period and the valuation of the property.