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The municipal capital gain is a tax that is paid when selling a property. Many are unaware of its existence and how it is calculated. Below, we explain everything you need to know about this tribute.What is municipal capital gains?
Although its name is very present in everyday life, few people really know what municipal capital gains mean .
In essence, the municipal capital gain is the common name given to the Tax on the Increase in Value of Urban Land (IIVTNU) . This tax is charged on the increase in value that a property experiences from the moment the owner acquires it until its subsequent sale.
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What is the capital gain of a property?
When we talk about what the capital gain of a home is, whether it is a house or an Chinese Overseas America Number Dataapartment, we are referring to the increase in value that a property generates over time. This is an increase that occurs thanks to various factors , among which stand out:
Home renovations.
Increase in demand in the real estate market.
Improvements in the area where the property is located.
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How to calculate municipal capital gains?
To calculate the tax base of municipal capital gains, the coefficients are used , which are updated each year in the General State Budgets (PGE). From here, each city council decides whether it considers it appropriate to update the values or not.
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Since November 8, 2021, with the entry into force of Royal Decree 26/2021, two methods for calculating municipal capital gains have been established. They are the following:
Royal method. It is based on the cadastral value of the land at the time of purchase and at the time of sale. From these figures, the difference between the two is calculated, and, depending on the time that has passed, one percentage or another is applied, depending on each municipality.
Objective method. It consists of a calculation of the increase in the value of the land, starting from a reference value indicated based on the date of purchase of the land. A fixed percentage is applied, chosen by each town council.
Later, we will explain how to calculate municipal capital gains with a practical example that uses both methods.
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