Municipal capital gain
How will the new surplus value be calculated now?
The Government has set two calculation options for the new municipal capital gains. The taxpayer will decide which system he prefers when paying taxes.
The first method is the so-called 'target system'. In this case, the taxable base of the tax is the result of multiplying the cadastral value of the land at the time of sale by the coefficients set by the municipalities.
In any case, these coefficients may not exceed those established by the decree. The coefficients will be updated annually taking into account the evolution of the real estate market.
The novelty is that this objective system becomes optional. The taxpayer has the possibility of paying taxes based on the real capital gain obtained at the time of the transfer of a property.
If the 'real capital gain' is chosen, the tax base will be calculated by obtaining the difference between the purchase price and the transfer price of the property. On this difference, the proportion that the land has in the asset must be applied.
If the taxpayer demonstrates that the real capital gain is less than that resulting from the objective estimation method, the real capital gain may be applied.
You only pay if you win
The Decree-Law also includes that those situations in which there is no increase in the value of the land will not be subject to taxation. In other words, if a profit is not obtained, the municipal capital gains will not have to be paid.
For this, the person interested in proving the non-existence of an increase in value must declare the transfer, as well as provide the titles that document the transfer and acquisition.
Also as a novelty, capital gains generated in less than a year will be taxed.
In other words, those that occur when less than a year has elapsed between the date of acquisition and transmission and, therefore, may have a more speculative nature. This option is already being applied in some cities.
The Municipalities that have established the Tax on the Increase in Value of Urban Land will have a period of six months from the entry into force of the Decree-law to adapt their regulations to the new legal framework.
