At MDG Advisors, we often see clients wanting to include all expense invoices when calculating capital gains from the sale of a property. However, this is not always allowed.
The Tax Agency clearly distinguishes between improvements and repairs or maintenance expenses. Only improvements—actions that increase the property’s value, enhance its livability, or extend its useful life—can be added to the purchase price, reducing the taxable gain. Examples include completely renovating a kitchen or bathroom, replacing electrical wiring, or installing efficient climate control systems.
Expenses aimed at keeping the property in normal condition, such as painting, fixing dampness, or replacing old windows, do not reduce capital gains, although they may be deductible if the property is rented.
In practice, the line between improvements and repairs is not always clear, leading to different interpretations. That’s why it’s essential to review each case carefully and maintain proper documentation. At MDG Advisors, we help our clients make the right decisions and optimize taxation when selling their property.