What is the Tax on the Increase in the Value of Urban Land?

It is a local tax, the collection of which corresponds to the Town Councils.

Taxable event: the increase in value experienced by the land and which arises as a result of the transfer of ownership of the land by any title transfer of the land.

Taxable base: until now it was determined by multiplying the value of the land on the date of transfer (cadastral value of the land) by the number of years that the land had been owned by the person transferring the land and by the percentage set by the Town Council within the limits established by law.

What’s new: Two new methods for calculating the tax base.

OBJECTIVE SYSTEM: Maximum coefficients are applied to the value of the land depending on the number of years that have passed since the initial transaction. The coefficients are updated annually according to the evolution of the real estate market.

Actual capital gains: Taxpayers will have the option of paying tax on the actual capital gain on the land (difference between the sale price and the purchase price) if this is lower than the taxable base shown by the objective system.

Local councils will be able to carry out the corresponding verifications.

Other amendments included in the Royal Decree-Law

NEW CASE OF NON-TAXATION

Operations where there is no increase in value will not be subject to taxation.

The taxpayer will have to request this and prove that no increase in value has been obtained.

TRANSACTIONS LESS THAN ONE YEAR OLD

Capital gains generated in less than one year, calculated between the date of acquisition and the date of transfer, will be taxed.