Non deductible expenses

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

• Payments made due to accidents that occurred in real estate that give rise to decreases in the value of the taxpayer's assets.

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

  The concept of improvement is not expressly contemplated in the personal income tax regulations. Now, the Resolution of July 30, 1991, of the Institute of Accounting and Auditing of Accounts, which dictates standards for the valuation of tangible fixed assets, in its third standard understands “improvement” as the set of activities through which produces an alteration in an element of fixed assets, increasing its previous productive efficiency.

  Therefore, it must be understood that repairs and conservations constitute those intended to maintain the useful life of the property and its productive or usable capacity, while improvements can 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.