The recent Supreme Court Ruling number 1130/2021, of September 15, 2021, resolves different questions raised with cassational interest for the formation of jurisprudence, the doctrine established in relation to the interpretation that should be given to article 23.1.b being especially relevant. ) of the Personal Income Tax Law regarding amortization in the case of leased real estate that has been acquired by inheritance or donation.
Article 23.1.b) of the Personal Income Tax Law indicates the following:
“The amounts intended for the amortization of the property and the other assets transferred with it, provided that they correspond to its effective depreciation, under the conditions determined by regulation. In the case of real estate, it is understood that amortization meets the effectiveness requirement if it does not exceed the result of applying 3 percent to the highest of the following values: the acquisition cost satisfied or the cadastral value, not including the value of the land. /i>”.
The Supreme Court analyzes and concludes what should be understood by “acquisition cost” when it comes to properties acquired free of charge. It is worth remembering that until now the Tax Administration followed a fairly restrictive and detrimental criterion for taxpayers who received real estate by inheritance, legacy or donation, understanding that, while in the case of free acquisitions an effective price was not met, an effective price had to be met. “acquisition cost” means the set of expenses and taxes paid exclusively for the acquisition.
In this way, the Administration understood that the basis for calculating amortization in the case of leased properties acquired free of charge was reduced only to the expenses and taxes paid for the acquisition, which implied a lower amortization base and therefore greater taxation for these taxpayers when they obtained income derived from the rental of the aforementioned properties.
Although this was the administrative position maintained until now, several courts have ruled against it, defending that the “acquisition cost” should be equated to the value of the property declared according to the rules of the Inheritance and Gift Tax plus the expenses and taxes inherent to the acquisition. An example of this are the rulings of the TSJ of the Basque Country dated June 12, 2006, the TSJ of Andalusia dated March 12, 2019 or the ruling of the TSJ of the Valencian Community dated May 30, 2019.
In fact, it is precisely ruling no. of the Inheritance and Donation Tax plus the expenses and taxes inherent to the acquisition.
The Supreme Court completely discards the criterion maintained by the Administration when defending that since the basis of depreciation is the effective depreciation of the value of the asset, it would be completely illogical to separate the concept of depreciation of a property from the element that characterizes it, as is precisely the loss of value of the good.
“To consider that amortization only includes the expenses and taxes assumed by the acquisition of the property is to ignore the meaning of the term amortization”.
Furthermore, among several of its arguments, the Court states that the expression “acquisition cost” is synonymous with acquisition value, which means that the criterion followed by the Administration makes no sense when comparing magnitudes that They are not homogeneous, such as the cadastral value and the expenses and taxes inherent to the acquisition, the latter magnitude that does not incorporate any value.
However, the High Court establishes doctrine in relation to the provisions of article 23.1.b) of the Personal Income Tax Law, determining that in the case of real estate acquired free of charge, the value of the property will be understood to be included in the acquisition cost. in application of the Inheritance and Donation Tax rules or the value verified by the Administration itself for such purposes.
This is undoubtedly good news for those taxpayers who have leased real estate that they acquired by inheritance or donation, as it makes it possible to apply a higher deduction for amortization expenses, as well as allowing them to rectify those self-assessments submitted in the previous four years. in which the set of expenses and taxes inherent to the acquisition were taken as the basis for calculating amortization exclusively.
Tax Department.
Laura Castellanos