Non deductible expenses

The following will not be deductible as expenses, among others:

• Payments made due to incidents involving real estate that result in decreases in the value of the taxpayer's assets.

• The amount of improvements made to real estate, without prejudice to the recovery of their cost through depreciation.

  The concept of improvement is not expressly contemplated in the Personal Income Tax regulations. However, the Resolution of 30 July 1991, of the Institute of Accounting and Auditing of Accounts, which establishes standards for the valuation of tangible fixed assets, in its third rule understands “improvement” as the set of activities through which an alteration is produced in an element of the fixed assets, increasing its previous productive efficiency.

  Therefore, it should be understood that repairs and maintenance are those intended to maintain the useful life of the property and its productive or usable capacity, while improvements should be considered those that result either in an increase in the capacity or habitability of the property, or in an extension of its useful life.