Capital gains are subject to taxes. Depending on the type of taxpayer, capital gains may be taxed on personal income tax and on corporation tax.
If we are talking about a property, the capital gain is a local tax and it is paid at the town hall where the property is located. This tax on the Increase in the Value of Urban Land (IIVTNU) is also known as municipal capital gain and is charged annually.
When does the municipal capital gain have to be paid?
The municipal capital gains tax must be paid whenever a profit is made from:
- The inheritance of a property
- Receiving a house as a gift
- Selling a home
How is the gain calculated?
The capital gain is calculated based on the cadastral value of the property and the time elapsed between the time of purchase and the gifting of the property.
To find out the tax base on which the tax is calculated, revaluation rates are applied to the property's cadastral value, which the town hall establishes based on the number of years the home has been owned.
The rate established by the town hall is applied to this tax base as long as it is less than the 30% set as the maximum limit. The result is the amount that the taxpayer must pay.
Who pays the municipal capital gain?
The IIVTNU payer will depend on the type of transaction. If the land or property is gifted, the recipient will be liable for paying the tax.
In the case of a sale, the tax will be paid by the individual or entity transferring the land, except non-resident individuals in Spain.