The Capital Gain or Increase in Value of Urban Land is a direct and local tax, regulated in articles 104 to 110 of the Law Regulating Local Treasuries, which taxes the increase in value experienced by such land (only urban nature) as a result of the transfer of the property by any title or real right of enjoyment, limited to ownership, on the referred land.
The amount of the capital gain will depend on the cadastral value of the land of the property, the number of whole years that have elapsed since the previous transfer and, since it is a Municipal Tax (Art. 59.2 LHL), it will be the municipalities themselves, those that approve by means of Fiscal Ordinances that regulate the tax rates to apply in each municipality.
The transfer of ownership of a property of an urban nature can take place in two ways:
On a “Inter vivos” basis, in which there is a consideration such as purchase and sale, swaps, adjudication in payment of debt, contributions to companies, etc.
For profit “Inter vivos”, Donation, or “Mostis causa”, succession/heritage.
Therefore, when there is a civil transfer of ownership, the taxable event occurs and, as a result, the tax liability arises.
The following cases are exempt from the payment of the Capital Gains:
Rustic land, which is considered to be land for the purposes of the Real Estate Property Tax, in accordance with the Law on Real Estate Cadastre (Art. 7.3).
The transfer of property and rights to the conjugal society.
Contributions or transfers of real estate made to the Asset Management Company from Bank Restructuring.
The constitution and transmission of easement rights.
The transfer of property within the perimeter defined as a Historic-Artistic Complex.
The transfers made on the occasion of the payment of the mortgage debtor’s habitual residence, as well as those made in judicial or notarial foreclosures.
The taxpayers of the Capital Gains Tax, in transfers for profit, shall be the natural or legal person or entity referred to in Article 35.4 of Law 58/2003, of 17 December, General Tax Office, who acquires the land or whose favour is constituted or transmits the real right in question, that is to say, acquirers.
In transfers of land for consideration, the natural or legal person transferring the land, i. e. transferor.
In the case of purchase/sales, swaps, etc. documented in a public deed, it will be the date of the deed and in the event of death it will be the date of death and in the case of private documents, it will be considered as the date of transfer the date of its incorporation in a Public Registry.
In the case of inter vivos acts, the period shall be 30 working days, in the case of mortis acts, the period shall be six months extendable to one year at the request of the taxable person.