Costs associated with obtaining a municipal construction permit can be deducted when calculating real estate capital gains for income tax (IRS), provided they genuinely enhance the property and are still valid at the time of sale, clarifies the Tax Authority (AT). This allows the fee paid for the urban planning permit to be added to the value of the property, potentially reducing the capital gains tax owed upon sale.

Update: New Guidance on Permit Costs The Tax Authority has released additional guidance stating that homeowners must retain all documentation related to the permits to ensure eligibility for the deductions, emphasizing the importance of proper record-keeping during property transactions.