Capital Gains Tax
What is the capital gains tax?
The Tax on the Increase in the Value of Land of Urban Nature, known as the capital gain tax, taxes the increase in the value of real estate between the time of purchase and that of sale. It is also paid in the case of an inheritance or a donation. However, to calculate it does not take into account the real value of the transactions of sale, but is taken as a basis for the cadastral value of the land and multiplied by a coefficient based on the years elapsed, according to Efe and Europa Press. This means that the seller has to pay for it even if the property has been sold at a loss.
The Tax on the Increase in the Value of Urban Land (Plusvalía) is a direct and optional municipal tax. Only the goods of urban nature, not those of rustic nature.
What lands are taxed?
Only the goods of urban nature, not those of rustic nature. Tribute only the value of the land, not the value of the construction.
The value of the land that is taken into account is, in general, the cadastral value. However, the most important non-subjection assumptions that are given are:
- Contributions of property and rights made by the spouses to the conjugal society, awards that are made in their favor and in payment to them, and transfers made to the spouses in payment of their common assets.
- Transfers of immovable property between spouses or in favor of the children, as a consequence of compliance with sentences in cases of nullity, separation or matrimonial divorce, whatever the matrimonial economic regime may be.
- The assumptions of merger or absorption of companies or branches of activity, when it implies the continuation in the exercise of activities.
- Contributions to compensation boards, awards for reparcelling, mandatory urban transfers to municipalities.