ICONOS FINALES-TRAZADOS

Many years ago it was built!

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The Supreme Court has clarified how to calculate the AJD of a new construction deed when many years have passed since the construction.

Many years ago it was built!

Upon completion of a new building, the developer must appear before the notary so that he can grant the “new construction deed.” Once this deed is available, the work can be registered in the Property Registry. In these cases, it is subject to the Tax on Documented Legal Acts (AJD), since the deed “has as its object a valuable amount or thing,” which can be registered in a public registry and is not subject to other incompatible taxes (such as ISD, ITP-TPO, or corporate operations, for example).

The taxable base of the AJD is the “real cost value of the new work” declared in the deed, and on this amount a rate of between 0.5% and 1.5% must be applied (depending on the autonomous community). For these purposes, the TEAC has established as a criterion that the taxable base is the execution cost of the work (that is, the material costs of carrying it out, without taking into account the market value of the property).

Well, the Supreme Court has confirmed that this is the case even if many years have passed between the date the property was built and the date of the new construction deed . In that case, the execution cost of the work from the year of construction must be taken as the taxable base of the AJD, without the Tax Agency being able to make a monetary update of those costs.

 

Our specialists will resolve any questions you may have regarding the taxation of your real estate operations.

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