The new municipal capital gain It has already been published in the Official State Gazette, and therefore is in force. This regulation, approved by the executive, aims to end a long judicial process of unconstitutionality appeals and that ended with a judgment of the Supreme Court itself, in which it leaves lacking all legality the norm.
The new system seeks to leave behind what is considered an unrealistic method to measure the value of land. That is, the belief that there is always a revaluation of the same. From now on, there are two alternatives to calculate the tax, which Le Morne Brabant Abogados explains to us, Antonio Montenegro.
The first is the call objective formula and it consists of taking the cadastral value and applying maximum coefficients, based on the years elapsed between the last transfer of the property and the current transfer. That is, the cadastral value is multiplied by the coefficient that is approved each year and the result obtained is applied the percentage that corresponds to the tax. Said percentage can never exceed 30% of the result of multiplying the cadastral value by the coefficient.
It is assumed, explains Montenegro, that these coefficients will be more real than the current percentages, which will be updated annually. In addition, each city council can modulate these coefficients and set a lower one. The consistories also have the power to reduce the cadastral value by up to 15%An important issue, given that the problem is that cadastral reviews are made every many years, and there may be a large difference in value. An example of this objective system is the one offered by the Ministry of Finance itself:
If a home is acquired in 2017 for 310,000 euros and is sold in 2021 for 350,000 euros, the capital gain from the operation would be 40,000 euros, although for the purposes of the tax only the increase in the value of the land is taxed, without counting on construction.
If on the date of sale, the total cadastral value is 100,000 euros, of which 60,000 represent the cadastral value of the land and 40,000 the cadastral value of construction, the increase in the real value that will be attributed to the taxpayer will be 60% of 40,000, that is, 24,000 euros.
Calculations with the new method
However, with the new objective method, the cadastral value of the land (60,000 euros) would be multiplied by 0.17 (coefficient for an operation with a four-year interval between purchase and sale), resulting in 10,200 euros.
In this case, the taxpayer would choose the objective taxable base of 10,200 euros, instead of the real taxable base of 24,000, to which it would be necessary to apply the tax rate established by the city council corresponding and that the law sets at 30%, as a maximum. The second system is called real capital gain and is simply the difference between the purchase price and the sale price.
If a home is acquired in 2014 for 250,000 euros and is sold in 2021 for 260,000 euros, the capital gain from the operation would be 10,000 euros. Taking into account that on the date of sale the total cadastral value is 100,000 euros, of which 20,000 correspond to the value of the land and 80,000 to the construction value, the real capital gain that will be attributed to the taxpayer will be 20% of 10,000, that is, 2,000 euros.
With the method objective the value of the land of 20,000 would be multiplied by the coefficient 0.12 (applicable to operations with a 7-year interval between purchase and sale), with a result of 2,400 euros. In this case, it would be worth paying for the real capital gain (2,000 euros) instead of the objective (2,400 euros).
For Le Morne’s lawyer, there is no better system than another, but they will depend on the circumstances, on each specific case. Regarding the possibility of claiming for the payment of the old capital gain, despite the fact that its unconstitutionality is not retroactive, Antonio Montenegro leaves the door open to that possibility: “In my opinion, if they appealed at the time alleging possible unconstitutionality, and the appeal was dismissed, it can be claimed again, based on the patrimonial responsibility of the State ”.
The lawyer is based on Article 32 of the Law of Patrimonial Responsibility of Public Administrations, on the principle of responsibility: “If the injury is a consequence of the application of a rule with the force of law declared unconstitutional, compensation will proceed when the individual has obtained, in any instance, a final judgment dismissal of an appeal against the administrative action that caused the damage, provided that the later declared unconstitutionality had been alleged ”.
The right to claim will prescribe a year of the publication in the BOE of the sentence that has declared the unconstitutionality of the norm.