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What is a deduction through valuation?

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Currently, the Capital Gains Tax Law (onwards, LISR) allows the use of valuations to prove and deduct improvements and construction in homes up to 80% of such valuation. The valuator needs to be approved by the College of Valuators or directly by SAT.   

This is an excellent option when you didn’t keep the invoices (facturas) of what you paid for such improvements.

Improvements have to strictly be things constructed after the past acquisition. If no construction was done during the years of ownership, then there is no deduction available for improvements. 

Also, an improvement done recently can be deducted at a higher rate than one done long ago. This is because improvements are depreciated by tax law, year by year. 

The Tax Service can audit such improvements for at least five years (and up to 10 if certain conditions apply) after the deduction is applied. Be sure to only deduct real existing improvements and don’t fall pray of valuators who provide black hat tricks to deduct taxes.

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