Proposal to change how the local capital gains tax is calculated and discounted

Automatic summary, not yet reviewed

1. The bill, introduced by the VOX parliamentary group, would amend the Local Government Finance Law to adapt it to Constitutional Court rulings on the tax on the increase in value of urban land, known as the municipal capital gains tax.
2. It proposes that the tax only apply when the sale of the family's main home produces a real gain, if the money is reinvested in a new main home within two years. The home must have been the taxpayer's registered residence for at least the two previous years, and the family unit must include at least one child under personal income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings. rules.
3. It changes how the tax base is calculated: only a real capital gain, computed under personal income tax rules or, for companies, under accounting rules and the Corporate Income Tax Law, would be taxed. This avoids taxing cases where there is no gain or there is a loss.
4. It sets new maximum annual percentages for calculating the tax (from 3.7 down to 3 depending on the years) and bars the tax bill from ever exceeding the taxpayer's actual capital gain.
5. It would let city councils grant rebates of up to 100% of the tax (the current limit is 95%) on transfers by inheritance to descendants, spouses and ascendants, and on land hosting activities declared of special municipal interest or benefit.
6. It limits city councils' power to review taxpayer-filed self-assessments: they could only check that the tax rules were correctly applied. The law would take effect the day after its publication in the Official State Gazette.

Who it affects

• People selling their main home, who could avoid the tax if they reinvest the money in another home.: proposed exemption
• People who inherit or receive assets from close relatives, who could pay less or nothing if their city council approves the rebate.: proposed rebate
• Taxpayers of the municipal capital gains tax who sold at a loss, whom the bill seeks to protect from paying without a real gain.: proposed calculation change
• City councils, whose power to review self-assessments would be limited and who would gain room to grant rebates.: proposed new rules

Words worth knowing

Plusvalía municipal (IIVTNU)

A local tax paid when land or a home is sold or transferred. It taxes how much the land's value went up, not the sale price.

Texto refundido

A Spanish 'rewritten text': one law that gathers several earlier laws on the same subject into a single text.

Bonificación

A rebate or discount a city council can apply to the tax bill.

Autoliquidación

A self-assessment: the taxpayer calculates and files the tax themselves, instead of the city council setting the amount.

No confiscatoriedad

The principle that a tax cannot be larger than the gain or assets being taxed.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

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