How is the sale of a rustic property taxed in IRPF?

When the sale of a < is formalized strong>rustic property, there may be a capital gain or loss that must be declared in the personal income tax for the corresponding year.

The capital gain or loss is calculated by determining the difference between the acquisition value of the farm, and the transmission value through a sale or a donation, depending on what includes article 34 of the Income Tax Law.

In the event that another rustic property is sold and purchased in the same year, the exemption for reinvestment in another property is not foreseen, as is the case habitual residence. There is a widespread erroneous belief that, when selling and buying a rustic property in the same fiscal year, the amount obtained from the sale is not taxed as a capital gain in IRPF.

The General Directorate of Taxes deduction provides for a series of expenses that must be taken into consideration to determine the acquisition value of the property.

In the case of a rural property sale, the acquisition value is set by the sum:

• Of the real amount for which the acquisition is made, which is determined by the price that appears in the deed of sale.
• The cost of the investments and improvements made to the acquired goods, as long as these involve an increase in the productive capacity of the farm or an extension of its useful life. These types of expenses are required to be duly justified with the corresponding invoices.
• And those expenses and taxes inherent to the acquisition, which according to the criteria of the General Directorate of Taxation in different tax consultations (binding consultations V2584-16 and V0131-04), are those such as notary expenses, registration of the property, agency, lawyer, Tax on the Increase in the Value of Urban Land corresponding to the dwelling and paid in the acquisition, and the expenses for the Property Transfer Tax.

As the acquisition value increases, the capital gain will be lower and therefore the value that is understood as acquisition for personal income tax purposes is lower.

When making a purchase or sale of a rustic property as an investment, it is advisable to seek advice on the taxes that must be paid and how it affects the IRPF or IS declaration of the taxpayer. From the office we are at your disposal, to offer you the best legal advice in this type of operation.

It may interest you: “Department specialized in Agrarian Law ”