VAT on a barter exchange cannot be included as an increased acquisition value for Personal Income Tax (IRPF)

Calculating capital gains or losses in the transfer of real estate requires precisely determining the acquisition value. A recurring issue arises when the acquisition operation, such as a barter exchange, is affected by a contractual resolution, raising doubts about which costs can be integrated into said value to reduce the IRPF taxable base.

What the DGT has ruled

The Dirección General de Tributos (DGT) has clarified that the acquisition value comprises the actual purchase price, investments, improvements, and inherent expenses or taxes, excluding interest. In the case of assets received through inheritance, the actual amount is that which is determined according to the rules of Inheritance and Gift Tax.

Regarding the query raised, the binding body points out that the VAT paid in a barter exchange cannot be included as an increased acquisition value. The basis for this decision is that said tax levies the future housing and, upon the resolution of the barter exchange, the right to a tax refund is what applies. However, the DGT allows the inclusion of other costs: the expenses and taxes inherent to the exercise of the resolutory condition that are necessary to recognize ownership of the land can indeed be counted.

What this means for you

If you are an individual who has inherited a property and subsequently carried out a barter exchange that ended in resolution, you must be cautious when calculating the acquisition value for the future sale of that asset. You will not be able to add the VAT paid in the barter exchange operation to increase the acquisition value and, therefore, decrease the capital gain in your IRPF tax return.

This criterion limits the ability to reduce the tax burden in the transfer of assets that have undergone processes of annulled or resolved barter exchanges, as the Administration considers that VAT is not part of the actual cost of the inherited asset, but rather a tax with its own refund mechanism.

What you should do

In a situation like this, it is necessary to perform a detailed breakdown of all expenses associated with the ownership of the property. It is fundamental to distinguish between the VAT of the barter exchange operation and those expenses or taxes derived from the resolutory condition that are indeed admitted under IRPF regulations. Assessing each case individually is essential to ensure that the calculation of capital gains strictly adheres to the IRPF Law and avoids possible requests for information from the Tax Agency.