New municipal capital gain

The Government has approved this Monday the royal decree-law that adapts the Tax on the Increase in the Value of Urban Land to the ruling of the Constitutional Court (TC) that declared null the calculation method of the so-called municipal capital gains that taxes the revaluation of the land before a sale, donation or inheritance of a house.

Speculation is taxed.

As a novelty, capital gains generated in less than a year will be taxed, that is, those that occur when less than a year has elapsed between the date of acquisition and transmission. The Government thus seeks to persecute operations that can print a more speculative character. This is an option that is already being applied in some cities and that will affect real estate agents and funds above all.

Real or objective goodwill

The text approved this Monday in the Council of Ministers, which this week has been brought forward one day on the occasion of the festivity that Madrid celebrates on the 9th, establishes two options so that the taxpayer can choose the one that benefits them the most and seeks to give them “security legal”. In no case will those who have not obtained a profit in the purchase-sale have to pay the tax and the taxable base of the tax will be adapted to the economic capacity of the taxpayer.

The first, allows the fee to be calculated using the cadastral value of the land at the time of the transfer but based on coefficients set by the Ministry of Finance that will be adjusted each year based on the reality of the real estate market (objective capital gain). . The second way is limited to valuing the difference between the purchase value and the sale value (real capital gain).

In this way, they say from Moncloa, one of the requirements demanded by the Constitutional Court is met: that the municipal capital gains tax reflect the reality of the real estate sector. The Constitutional ruling [here in full] declared unconstitutional not the tax but the way in which it was calculated, which could be “confiscatory.” Until the ruling, the cadastral value of the land was multiplied by the number of years in ownership and an annual coefficient was applied (generally never above 3.5%) based on those years. The tax was applied to the result of this operation. In addition, the Government grants city councils, the entities that settle the tax, the possibility of lowering the cadastral value of the land by up to 15% so that the reality of the real estate field in the municipality can be reflected. The municipal capital gains tax is a fundamental tax for the financing of the consistories; It represents about 2,500 million euros per year.

Immediate but non-retroactive application

Since the Constitutional Court will declare the collection of municipal capital gains null and void on October 26, the tax has been on pause. Hence the urgency of the mayors to request a solution to be able to resume the collection of the fee and hence the model royal decree-law, which allows it to enter into force immediately, once published in the Official State Gazette (BOE). , without prejudice to the fact that it can subsequently be processed in Parliament as a bill subject to change.

As tomorrow is a holiday, the spokesperson, Isabel Rodríguez, indicated at the press conference after the Council of Ministers, the legal text will foreseeably come into force on Wednesday, November 10. Since then, the municipalities that have established this tax will have six months to adapt their regulations to the new legal framework.

The Government has finally decided that the text is not retroactive, so there will be a two-week gap. In other words, city councils will not be able to collect the taxes corresponding to operations between October 26 and the entry into force of the royal decree-law.

No option to claim

The two Constitutional magistrates Cándido Conde-Pumpido and María Luisa Balaguer warned about this temporary gap in their joint opinion in which they pointed out that the ruling “causes an unnecessary and unbalanced regulatory vacuum that will benefit those who, even having obtained significant capital gains, do not They will be forced to pay the tax. And they considered that the legislator should have been given a period of time to implement an alternative system to the current one to tax capital gains.

In its judgment, the TC closed the door to claims by establishing that only those who are pending a judicial resolution or administrative resolution may claim, but not those who have provisionally or definitively settled the tax without having challenged the payment before the ruling of the October 26th.