The Council of Ministers has just approved the Royal Decree-Law that modifies the way of calculating the municipal capital gains tax to adapt it to the ruling of the Constitutional Court that declared this tax illegal on October 26. The regulations adapt the tax to the ups and downs of the real estate market, in such a way that it seeks to pay capital gains only in the event that a home is sold or transferred when there has been a profit. Whoever sells a house in losses will be exempt from payment as of this Wednesday (November 10), after its publication this Tuesday in the Official State Gazette (BOE). It is not retroactive.
“From the moment we learned of the Constitutional ruling, the Government said it would give a quick response and it has reached the table of the Council of Ministers today. It is very good news for the city councils of Spain and for the citizens”, comments Isabel Rodríguez, Minister of Territorial Policy and Government spokesperson.
The Royal Decree Law establishes two alternatives for calculating the tax:
• The objective formula: in this case the cadastral value of the property will be multiplied with new coefficients. Each year new coefficients will be approved that will be contemplated, for example, in the General State Budget law and will evolve according to the real estate market. It is an optional method, since the taxpayer has the possibility of paying taxes based on the real capital gain obtained at the time of transfer of the property.
• The real formula: it will be a calculation of the difference between the sale or transfer price and the purchase or acquisition price of the property. If the taxpayer shows that the real capital gain is lower than that resulting from the objective estimation method, he may apply the real one
The taxpayer may choose between these two models, the one that is most convenient for him. Rodríguez insists that the tax will not be paid if a profit is not made. We recall that this tax is levied on the cadastral value of the property's land, not the flight. Another novelty is that capital gains generated in less than one year, calculated between the acquisition date and the sale date, will be taxed.
This Royal Decree-law, which modifies the revised text of the Local Tax Regulatory Law, has come into force today with its publication in the BOE (Tuesday, November 9) and the municipalities will have six months to adapt it to their legal framework. In 2019, the consistories of Spain collected 2,500 million euros through this tax. And the Government has indicated that they will not need to cut their services because they will be able to continue offering them to citizens.
The Royal Decree-law establishes that the taxable base of the tax will be the result of multiplying the cadastral value of the land at the time of accrual by the coefficients approved by the City Councils.