Bill would change how the local capital gains tax is calculated

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1. The bill would exempt from the local capital gains tax (plusvalía municipalPlusvalía municipal Popular name for the tax on the increase in value of urban land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana): it taxes the rise in value of urban land between purchase and sale.) any land transfer where the land did not actually increase in value. The interested party must report the transfer and provide the deeds for both the sale and the purchase.
2. It would change how the tax base is calculated: the previous annual percentages would be replaced by maximum coefficients based on how many years the land was held, ranging from 0.14 for less than one year to 0.45 for 20 years or more. These coefficients would be updated yearly, for example through the national budget laws.
3. If the taxpayer shows that the actual gain is lower than the base calculated with the coefficients, that actual gain would be used as the tax base. City councils could verify these cases.
4. City councils could apply a reduction coefficient of up to 15 percent on the cadastral value of the land to adjust for how up to date it is, and a reduction of up to 60 percent during the first five years after a cadastral review.
5. City councils that levy this tax would have to adapt their tax ordinances within six months of the rule taking effect. Until then, the new rule and its maximum coefficients would apply directly.
6. The rule would take effect the day after its publication in the Official State Gazette (Boletín Oficial del Estado), and the Government and the Ministry of Finance would be empowered to issue the rules needed to apply it.

Who it affects

• Owners who sell or inherit land or an apartment: They could show there was no gain in value, or that it was lower than calculated, and pay less or no tax.
• City councils: They must adapt their tax ordinances within six months and may apply reductions and verify declared values.
• Taxpayers who file self-assessments: The city council could only check that they applied the rules correctly, without assigning different values.

Words worth knowing

Plusvalía municipal

Popular name for the tax on the increase in value of urban land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana): it taxes the rise in value of urban land between purchase and sale.

Base imponible

Tax base: the amount on which the tax is applied to work out what is owed.

Valor catastral

Cadastral value: the value the administration assigns to a property for tax purposes.

Ordenanza fiscal

Tax ordinance: the rule each city council approves to regulate the taxes it manages.

Devengo

Accrual: the moment the tax is deemed to arise, here when the land is transferred.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries