The capital gain or loss declared on your income tax return when you transfer a property (whether by sale, donation, contribution to a company, etc.) is an element that is very susceptible to being reviewed by the Treasury, especially if you declare a loss. There is one element in particular to consider, which is depreciation.
You must be very careful when calculating the capital gain or loss to declare to the IRPF and always have all the documentation that justifies the amounts declared because, if you have proof, they will surely ask for all of them.
If you have rented the property you are transferring, then the depreciation corresponding to the years of rental is included, which must be added to the calculation of the capital variation. The law establishes that depreciation applicable when the property has been rented will be considered less acquisition value when you declare the transfer. This means that, if you take them into account, your personal income tax for the transfer will be higher.
Comments on this:
- If the property has been rented and when declaring the rental you have deducted the depreciation, when selling it you must include them in the calculation.
- This is the same criterion that applies to companies in Corporate Tax.
- Although it may have been common practice not to take them into account, it is risky not to do so and it is relatively easy for the Treasury to detect it.
- The doubt may arise whether the Treasury could demand the amortizations from the beginning of the lease or only those of the last four years due to prescription.
- If you add them, a specific box for “Amortizations” will appear in the Income Tax return. If you do not declare them, this box will not appear, but the AEAT has the information on the income presented in previous years.
If you have recently made a transfer of a property on a personal level or will do so soon and are considering the impact of this point on your return, you can contact me whenever you want and we can talk about it in detail.