Municipal Capital Gains: The new calculation methodology comes into force

It is official, Wednesday, November 10, the new Royal Decree-Law that modifies the calculation methodology of the Municipal Capital Gain has come into force.

At the end of October, the Constitutional Court declared this tax null and illegal and paused its collection throughout the Spanish state. A decision that numerically implied that the city councils of the whole country stopped entering about 2,500 million euros per year.

But as announced yesterday in the Official State Gazette, as of today, the collection of the Municipal Capital Gain is resumed. Of course, in a very different way and with two new calculation formulas

With this new reform, what is sought is that said tax is only paid in sales or transfer operations in which there is profit. In this way, the sale of a home in loss will be free of payment.

How is the “new Municipal Capital Gain” calculated now?

The Royal Decree Law establishes two forms of calculation. An alternative that will allow sellers to choose the most beneficial one.

Objective formula

New annual coefficients will be set in each City Council that will be updated according to the real estate market. These will be multiplied by the cadastral value of the property.

Real formula

This calculation will be obtained from the difference between the current sale value and the purchase value when the home was purchased.

As mentioned earlier in this text, those sales and purchase operations in which there is no profit will be exempt from payment.

Can you claim the payment prior to the new reform?

The new reform will not be retroactive.

As established in article 10.2 of the General Tax Law: “Salvo que se disponga lo contrario, las normas tributarias no tendrán efecto retroactivo y se aplicarán a los tributos sin período impositivo devengados a partir de su entrada en vigor y a los demás tributos cuyo período impositivo se inicie desde ese momento”.

Do you want to take advantage of this situation and take the opportunity to sell your apartment obtaining the highest possible profitability?

At KM2 we are waiting for you! Contact our real estate agency in Barcelona and leave the buying and selling process in the best hands.