Key points to the new capital gains tax on properties

The Council of Ministers has approved the new royal decree-law about the capital gains tax on property transactions, after the Treasury Department had to modify the method used since it was declared unconstitutional.

The property gain tax is collected directly by municipalities' town halls. This tribute is paid when a person makes a donation, sells or inherits a property. What it is really taxing is the increase of capital appreciation of the land where the property was built on, from the moment it was bought to the moment of its transmission.

The new regulation improves the computation of the tax base in order to guarantee that taxpayers who do not obtain a profit from the sale of their property are exempt from paying the tribute.

This new model will adapt the property transfer tax to the variability of housing prices in addition to the reality of the real estate market, to tax the real gain, based on new ratios that will be updated every year, capturing the market performance based on the land survey. In addition, it will offer tax payers two alternate options to calculate the tribute, allowing them to choose the most beneficial for them.

When there is profit gained from property transmission, therefore, two possible methods could be applied to calculate the tax base.

-Objective estimate: In this case the land survey value will be multiplied with new ratios that will be provided for in the Government Budget, following the real estate market evolution.

-Direct or real estimate: This case will be determined by calculating the difference between the acquisition and sale value, therefore the price of transmission of the property.

It must be highlighted this is a partial reform, and not a new tax, since it is just introducing a new premise by modifying the method to determine the tax base.

Town halls will have six months to adapt

Town halls haven’t been able to collect this tribute since the sentence was handed down, therefore the Treasury Department's haste for this tax come into effect as soon as possible.They are urging Town halls to pass the new fiscal regulations in six months time, since every month this tribute is not charged, the municipal treasuries lose approximately around €170m,  and according to the expected revenue for 2021, that figure amounts to € 2,075m.

In the case of the Barcelona Town Hall, it will result in an approximately 30% loss of revenue. LLuis Català, Forcadell’s deputy director and legal advisor declares “we must keep in mind that this tribute currently generated between 5%-6% of the revenue of the town hall’s municipal income (roughly €180m)”.




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Cristina San José

Cristina San José

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