Today, from Welex, your lawyers in Marbella, we pay special attention to the calculation of the capital gain that is generated at the time of the sale of a property in Spain.

Specifically we refer to Article 35 of a law that in our law firm in Marbella we give significant importance. We are talking about the Law of Personal Income Tax in Spain, hereinafter I.R.P.F. and specifically, how to deduct the works when declaring and paying the capital gains tax in Spain.

 

Works of improvement vs. works of maintenance in a house in Spain.

 

When we carry out works in our property, it is very important to know how to differentiate when they are works of improvement and when they are works of maintenance, conservation or repair. This is due to the fact that, to the works destined to improvements, a fiscal benefit is granted in the article 35 of the Law of IRPF.

This article 35 of the Personal Income Tax Law mentions exactly the following:

Article 35. Transmissions for valuable consideration.

  1. The acquisition value will be formed by the sum of:
  2. a) The actual amount for which such acquisition would have been made.
  3. b) The cost of the investments and improvements made in the acquired assets and the expenses and taxes inherent to the acquisition, excluding interest, which have been paid by the acquirer.

Under the conditions to be determined by regulations, this value shall be reduced by the amount of depreciation.

  1. The transfer value shall be the actual amount for which the disposal would have been made. The expenses and taxes referred to in paragraph 1(b) shall be deducted from this value insofar as they are paid by the transferor.

The actual amount of the value of the alienation will be taken as the amount actually paid, provided that it is not lower than the normal market value, in which case the latter will prevail.

https://www.boe.es/buscar/act.php?id=BOE-A-2006-20764 Article 35.

This article grants taxpayers the right to increase the actual amount for which such acquisition would have been made, by the cost of the investments and improvements made in the acquired assets. That is to say, at the time of calculating the capital gains tax on the transfer of a property we will be able to add the costs of the works of improvements to the total of the price of the sale, deducting in this way the works of improvement.

New rooms or buildings will be considered as improvement works. Also considered as improvement works are those that increase the capacity or habitability of the property.

They will not be considered works of improvement, but works of maintenance, repair or conservation those expenses that have had the holder of the property during the period of possession of the same one (maintenance garden, exterior interior painting, as well as the furniture that this one has acquired during the same one or the works directed to repairs of the property, etc).

Being the major works, and not the ones of minor works, those that authorize the realization of performances that suppose the creation of new structures, new stays or the installation of new elements of fixed assets that justify that the realized works must be qualified as investments or improvements.

It is important to point out that in order to obtain this tax benefit, the taxpayer must provide documentary evidence to the file that accredits the effective accomplishment of these works, its amount, that indeed this has been the one that has supported the cost of the same ones, and that they realize a description of everything carried out. This is important since the Tax Agency will not make this deduction based only on the statements made by the taxpayer.

Do not hesitate to contact our law firm in Marbella now! Our economists on the Costa del Sol are experts in obtaining efficient calculations of your capital gains in Spain.