The sale of a property during the first five years from its acquisition, will be taxed if there is an increase in the value of the land, above what would have been done with the previous system, annulled by the Constitutional Court, in a ruling of 26 October 2021, and replaced by the Government through the entry into force of Royal Decree-Law 26/2021, of November 8.
However, as of the fifth year, the maximum applicable indices are lower than those that had been used by the municipalities, reaching, for example, 45% of the cadastral value instead of over 60%, which was applied to the purchase and sale valuations of more than 20 years between the acquisition and sale of the property.
Alejandro del Campo, tax advisor at the firm DMS, legal intelligence explains that “it is surprising that such a significant reduction in the tax base of the Capital Gains Tax has been introduced (comparing the objective calculations, that of the old and the new capital gains) , after five years of being the owner of the transferred property (by sale, inheritance, etc.)”.
And he adds that “the reduction can still be higher if the client rejects this objective calculation of the new capital gain because he can prove with deeds that the increase is lower (as regards the land), or even not pay anything if he proves that he has not there has been a real increase or there has been a loss”.
How is the new system?
As of the entry into force of the Royal Decree-Law, the taxable base of the tax is governed by the new article 107 of the Consolidated text of the Local Treasury (TRLHL), according to which the cadastral value of the land is applied, with a generation period from the month +1, since the exclusion from taxation of transmissions made in the first year from the last subject transmission disappears, up to a maximum of 20 years, computing full years, unless it is less than the year, in which the annual coefficient is prorated taking into account the complete months, that is, without taking into account the fractions of the month. And, finally, the coefficients set by the municipal ordinances of each city council are applied, without exceeding those set as maximums in this article 107 of the TRLHL. The rule seeks that the tax so that it reflects the reality of the real estate market at all times and 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 most beneficial for the taxpayer will be applied: the tax base will be the result of multiplying the cadastral value by new coefficients that will take into account the real estate reality or will be determined by the difference between the price sale and acquisition
The City Councils will have the power to lower the cadastral value or the coefficients, as was already being done with the previous taxation system.
Do the municipalities lose?
The regulations provide that the maximum coefficients be updated annually by means of a regulation with legal status, and this update may be carried out by means of the General State Budget laws. If, as a result of the update, any of the coefficients is higher than the new legal maximum, this will be applied until the new fiscal ordinance that corrects the excess comes into force.
Dangerous type rebates
The Royal Decree-Law grants a period of six months to the City Councils to adjust their coefficients. These can establish in the fiscal ordinance a reduction coefficient that weighs their degree of updating, with a maximum of 15%. However, the tax advisers consulted agree in pointing out that many of the municipalities are going to raise the rates that have been applied to cover the losses that the new system will entail for establishing the tax base of the Tax.
In this line, it is expected that there will be difficulties for the recognition of discount against cadastral values of a report that does not reflect planning modifications approved after the approval of the report.
An important fact to take into account when paying the Tax is the limitation of the tax base to the increase in effective value when this situation has been accredited by the taxpayer in the terms provided for in the event of non-subjection due to the non-existence of the increase. of value and the tax base of the objective method is higher. This is a benefit for taxpayers that includes the judgment of the TC.
And it must be taken into account, also, that the cases in which the land, even if it is urban in nature or integrated into real estate with special characteristics, at the time of payment, does not have a certain cadastral value, the Corporation may carry out the liquidation , placing the value at the time of accrual.
In this case, self-assessment is excluded, subject to liquidation, as established in the new article 110.4 of the TRLHL. And, in addition, they can reduce during the first five years at most and with a limit percentage of 60% when the cadastral values are modified as a result of a general collective valuation procedure.
How much does the Corporation lose?
The Technicians of the Ministry of Finance (Gestha) estimate that the City Councils, the provincial ones aside, will lose a minimum of 78 million annually with the new regulation. Thus, this group warns that there will be a “hole” in 35 capitals and cities with more than 150,000 inhabitants that will exceed 20% of income from this tax, counting exclusively the effect of the new coefficients of the objective method. This indentation will be greater in the case of smaller municipalities that are highly indebted.
Specifically, among the large cities it is pointed out that cities such as Getafe, Lérida, Málaga, Zaragoza, Murcia, Córdoba, Alicante, Jerez de la Frontera, Móstoles, Huelva, Badalona, Cádiz, Segovia, Girona will lose more than 25% of the collection. , Cuenca, Teruel and Granada.
On the contrary, the technicians maintain that only four capitals will increase income: Madrid (73 million), followed by Santander (15 million), León (6.7 million), Soria (3.8 million) and Albacete (1.8 million). ), since they had annual percentages lower than the new maximum coefficients; unless the new fiscal Ordinances approve other lower ones.
Gestha calculates that the most affected municipalities will be those of Barcelona (-38 million), followed by Malaga (-11.9 million), Zaragoza (-9.2 million) and Murcia (-7.1 million), which had annual percentages higher than the new maximum coefficients.
Would there be another solution?
Ransés Pérez Boga, president of the Association of State Tax Inspectors, considers that this is a solution to keep the financing of Local Corporations healthy. “How is money going to be returned to those who have made a profit from the sale of a property? , he asks, while pointing out that we are talking about nearly 2,000 million euros, an amount that would directly affect the waterline of the City Councils, let us not forget that they are the ones that cover the basic services of the citizenry”.
And he concludes that “the only solution would be to raise the Personal Income Tax (IRPF) rate by one point, but this would be a less fair situation for those who have not sold a property.”
Who has been spared from paying?
Administrative agencies and tax consultants receive these days a barrage of queries about the new payment system, in view of the legal vacuum that has been generated among taxpayers who paid taxes or were waiting to do so before the issuance of the sentence. of the TC or in the interim between its approval and its publication in the BOE.
Pérez Boga acknowledges that those who have obtained a deed of the sale operation will be exempt from paying the tax, “at the expense of the interpretation that the Treasury makes of the TC ruling.”
And he estimates that a great controversy will be generated before those who offer the possibility of appealing the liquidations after the sentence, in expectations of a possible sentence of the TC that could declare the new regulations unconstitutional for not using a sufficient legislative vehicle.
If the fundamentals of the sentence are followed, we will verify that those who have carried out operations signed in a public deed between October 26 and November 9 (included), cannot be required to pay the Tax since the regulatory norm has been declared unconstitutional.
It is risky to tell the taxpayer not to pay when the interpretation is not yet known
More controversial is the situation created with the operations signed before October 26, the date of publication of the sentence in the BOE, if the situation has not yet arisen or the liquidation already carried out is pending the approval of the Tax Administration.
In this regard, the Barcelona notary Jesús Benavides, in a brief practical and temporary analysis of municipal capital gains, argues that “there is a tax doctrine that considers that the tax will not be payable in these operations.” However, he clarifies that it is risky to tell the taxpayer that he does not pay when the interpretation that the total Tax Administration will make is not yet known.
For this reason, it recommends that “or more sensible and prudent point to instructing the taxpayer to contact their City Council to find out their position in this specific situation and, in view of it, if it is unfavorable for the taxpayer (that is, that indicate that you must pay the capital gains), recommend that you seek expert legal advice so that you proceed according to the recommendation obtained.
Who will have to pay?
The operations signed as of November 10, those signed before October 26, 2021, with the settlement already presented or already practiced and not contested, or those that have a final judgment.
More surprises for the pocket
-The new reference value and the cadastre
Stella Raventós, president of the Spanish Association of Tax Advisors (Aedaf), explains that inheritances with real estate are going to suffer, because together with the capital gain, the Inheritance Tax and the Patrimonial Transfers are paid, which from January 1, 2022 , they will have to apply the new reference value to find the tax base and not the real value of the property. This value will be calculated every year by making an average of the price of the properties, with data from the Property Registries, by areas of the same municipality, although this area does not have to coincide with a neighborhood or a district. The tax advisor Alejandro del Campo warns that if we sell the house for 200,000 euros and the value is 240,000, we will have to pay taxes on that amount. In addition, it will be necessary to have the catastrazo, which raises the factor…