Can renovations be included in your home’s sale price? Here’s what the tax office says
If you’ve invested in improving your home before selling, you might be wondering if those renovations will automatically increase the sale price. While many homeowners think they can simply add the cost of renovations to their property’s value, the reality is more complex.
The Tax Office has made it clear that it’s not that straightforward. In several recent rulings, it has refused to allow homeowners to systematically include the cost of renovations in the final sale price of a property. This has caused some confusion and frustration among sellers, as many believe that improvements significantly boost the property’s value.
What does this mean for homeowners?
- Not all renovations are considered "added value": The Tax Office doesn’t automatically include renovations in the sale price because not all improvements are seen as a direct and measurable increase in the property’s value. For example, painting or changing the flooring may enhance the home’s appearance, but that doesn’t guarantee it will be reflected in the final price.
- Distinction between maintenance and improvement: Renovations that simply maintain the property’s condition are not considered improvements for tax purposes. Only those that genuinely increase the property’s value, such as expanding living spaces or adding new rooms, are taken into account.
- Essential documentation: If you want renovations to influence the sale price, it’s crucial to have all the documentation proving that the work was an improvement and not just maintenance. This includes detailed invoices and proof of payment that clearly reflect the cost and nature of the work done.
Impact for sellers in Ibiza
For those thinking of selling their home in Ibiza, this is especially important. Many homeowners invest in renovations, expecting these improvements to increase the property’s value. However, before assuming you can add the cost of the works to the sale price, it’s essential to understand what the Tax Office allows and what it doesn’t.
If you’re in this situation, we recommend seeking tax advice to ensure that your renovations are recognised in the final value. At CASAVIVA Inmobiliaria, we can help you manage the sale of your property efficiently, ensuring everything is in order to avoid any surprises.
