Reformed Capital Gain Tax on Properties

Details: Category: Economy; Also available:; Published: 12 November 2021

Madrid

The government has rapidly reformed the Capital Gain Tax on Properties (Plusvalía) that came into force already on 10 November after the Constitutional Court (Tribunal Constitucional) on 26 October declared the previous part of the law unconstitutional.

The reform guarantees that taxpayers who do not obtain a profit from the sale of a property will be exempt from paying the tax.

Two options are established to determine the tax rate and the one that is most beneficial for the taxpayer will be applied. The tax will either be:

The result of multiplying the cadastral value (valor catastral) by new coefficients
Or the difference between the purchasing price and the selling price

The municipalities will have the power to lower the cadastral value or the coefficients, which will also help the tax to reflects the reality of the real estate market at all times.

The coefficients are set by the Town Halls (Ayuntamientos) and depends on the number of years elapsed since the acquisition of the property, but these coefficients being established are not allowed to exceed those indicated below:

Period of ownership	Coefficient
Less then 1 year	0,14
1 year	0,13
2 years	0,15
3 years	0,16
4 years	0,17
5 years	0,17
6 years	0,16
7 years	0,12
8 years	0,10
9 years	0,09
10 years	0,08
11 years	0,08
12 years	0,08
13 years	0,08
14 years	0,10
15 years	0,12
16 years	0,16
17 years	0,20
18 years	0,26
19 years	0,36
20 years or more	0,45

Sources:

Legislation:

www.boe.es - Real Decreto-ley 26/2021, de 8 de noviembre - Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana

Economy