Revision of the coefficients for calculating the Municipal Capital Gains Tax in 2023

On November 24, 2022, the draft General State Budget Law for 2023 was approved.

These budgets foresee new developments in housing matters. Specifically, an update is included for the calculation of the Tax on the Increase in the Value of Urban Land, better known as Plusvalía.

From KM2 Servicios Inmobiliarios in this new blog entry, we detail aspects such as what the capital gains tax is, the new approved coefficients, who must pay it, how it is calculated and what are the deadlines, among others.

What is the Municipal Capital Gains Tax?

We are talking about one of the best known taxes. Specifically, it is levied on the increase in the value of urban land at the time it is transferred.

Thus, the tax is levied whether or not the land is built on. For this reason, when speaking of the transfer of a property, what is taxed is not the building itself, but the transfer of the land on which it is built.

Revision of the coefficients for the calculation of capital gains tax

The coefficients used for the calculation of the capital gains tax help to estimate the revaluation of a property, acting on the increase in value of the property from the time of purchase to the time of sale.

Thus, depending on the readjustments made to these coefficients, those who sell their property in the coming year may be more or less affected.

Years since acquisition	2022	2023
Less than a 1 year	0,14	0,15
1 year	0,13	0,15
2 years	0,15	0,14
3 years	0,16	0,15
4 years	0,17	0,17
5 years	0,17	0,18
6 years	0,16	0,19
7 years	0,12	0,18
8 years	0,10	0,15
9 years	0,09	0,12
10 years	0,08	0,10
11 years	0,08	0,09
12 years	0,08	0,09
13 years	0,08	0,09
14 years	0,10	0,09
15 years	0,12	0,10
16 years	0,16	0,13
17 years	0,20	0,17
18 years	0,26	0,23
19 years	0,36	0,29
20 years or more	0,45	0,45

Source: Expansión

An increase is observed in almost all periods, although it is maintained for sales of four- and twenty-year properties. In the cases of two, three, fourteen, fifteen, sixteen, eighteen and nineteen years, on the other hand, it decreases.

This is how the new Municipal Capital Gains Tax is calculated

Two options are proposed so that each person can choose the one that is most convenient for him or her:

• Real mechanism: It is calculated based on the difference between the acquisition value of the land and the sale value.
• Objective mechanism: Reflects the evolution of the real estate market. It allows taxation based on the real capital gain obtained at the time of the transfer of a property. The taxable base of the tax is the result of multiplying the cadastral value of the land at the time of accrual by the coefficients approved by the municipalities.

We assume the acquisition of a house in 2014 for 210,000 € and the sale of this in 2021 for 230,000 €. The total cadastral value is €100,000, corresponding to the land, 20% (i.e. €20,000). The maximum tax rate is 30%.

Acquisition value = 210.000 €.

Transfer value = 230.000 €.

Capital gain of 20,000 € with which the tax must be paid.

• Calculation from the actual method:

Transfer value = 230,000 € x 20% = 46.000 €.

Acquisition value = 210,000 € x 20% = 42.000 €.

Taxable income = 46.000 € – 42.000 € = 4.000 €.

Tax liability = 4,000 € x 30% = 1.200 €.

• Calculation based on the objective method:

20.000 € x 0,12 = 2.400 € of tax base

Tax quota = 2.400 € x 30% = 720 €

In this case, the cheapest option to choose for the taxpayer would be the calculation through the objective method.

When is the municipal capital gain paid?

In the case of selling a property, donating it or inheriting it, the capital gain must be paid in the following terms:

• Sale or donation of the property: Within 30 business days from the date of sale or donation.
• Inheritance: Within 6 months from the date of death, extendable up to one year.

Who pays the municipal capital gains?

Usually, the purchase and sale action is the most common. In this case, the seller is the one who must pay the municipal capital gains.

If we talk about donations, the one who receives the donation will be the person who will pay the capital gains.

Not obligatory on the part of the municipalities

It is worth mentioning, however, that this revision of the coefficients is not mandatory for the Town Halls. The Government only stipulates maximums, but not minimums.

It will be the City Councils who will have in their hands the correction of up to 15% downwards of the cadastral values ​​of the land, in value of its degree of updating, with the aim that the tax adapts to the corresponding real estate situation in each municipality.

Sales solution for a price lower than the purchase price

The main problem that was sought to be remedied with this update of the coefficients is that any individual who sells a property at a loss (due to its cadastral value or due to the effective price of the sale) will not have to pay the Plusvalía tax.

Now that you know all the details about the revision of the coefficients for the calculation of the Municipal Capital Gain in 2023, we invite you to request personalized advice based on your needs.

At KM2 Real Estate Services, a real estate agency in Barcelona and Madrid, we will help you assess your situation so that you can make the best decision at the present time.