How to easily calculate the municipal surplus value

In recent months, municipal capital gains have been one of the most sought after topics. This is because in November 2021 the government approved a modification in the way of calculating capital gains. Next, we explain how to calculate it so that you know how much you will have to pay.

What is the municipal capital gain?
Municipal capital gains is the name popularly received by the Tax on the Increase in Value of Urban Land (IIVTNU).

The objective of this tax is to tax the increase in value that urban land has experienced as the years have passed since its purchase by an owner.

As its name indicates, this tax is of a municipal nature, so depending on where the property is located, the amount to be paid will be different, since each municipality will mark different percentages to value the home.

When is the capital gain paid?

when you sell a house
you receive a property as an inheritance
when you receive a house as a donation.
At this point, you will wonder who should pay the amount referring to the capital gain:

If it is a sale of a property: the payment will have to be made by the seller within a period of 30 business days.
If you inherit a house: the capital gain will have to be paid by the heirs within 6 months of the death of the family member.
If you receive a donation: the beneficiaries of the donation must assume it within 30 business days.

What will you need to know to calculate the municipal capital gains?

Know the cadastral value of the land

First of all, you will have to know the cadastral value of the land. The municipal capital gain is calculated based on the value of the land, not of the home. This is the difference between the cadastral value of the land when you bought the house with the cadastral value at the time you sold it. The cadastral value of any property can be found on the IBI or cadastre receipt.

Years elapsed between purchase and sale

The number of years elapsed between the purchase and sale of the property. The fee to be paid is calculated based on a percentage linked to the tax period, this being a maximum of 20 years. In other words, if you have been an owner for 40 years, you will be obliged to pay the same fee as if you had been an owner for 20, there is no reduction.

Municipality or municipality of your property
This data may be very evident in some urban areas, but in rural areas it may be somewhat more complex to know without actually consulting. For example, the Madrid City Council attributes a value increase coefficient to determine the municipal capital gain.

What is the reason why the tax rate changes between Autonomous Communities?

These are the legal foundations of municipal capital gains:

In the first place there is the Regulatory Law of the local Treasuries (Ley de haciendas locales). This law applies to the entire Spanish state.
Secondly we have the municipal ordinances of each Town Hall. Taking into account the location of the property in the case of transmission, the municipal capital gain will change. For example, in the Community of Madrid, the Fiscal Ordinance Regulating the Tax on the increase in the value of urban land (IIVTNU) is reflected in BOCM number 310 of December 30, 2014.

How to calculate the municipal surplus value?

As we explained to you at the beginning of the article, in November 2021 the Government approved a new way of calculating capital gains. In this new way, citizens who are going to pay the tax are given the opportunity to choose between two methods to calculate the tax, whichever is more beneficial to them. These two methods are: the calculation of the tax base of the real capital gain or the calculation of the objective increase of the tax base of the value of the land.

Calculation of the tax base of real capital gains
If the taxpayer wants to calculate the amount using this method, he will have to do so using the following formula:

Transmission value – Acquisition value X Percentage of the Catastral Value of the land

In this way, the values that appear in the formula are the following:

The transmission value of the house is the sale price of this
The acquisition value of the house is the price that was paid when the property was acquired.
The percentage of the cadastral value of the land can be found in the last receipt of the IBI or in the online office of the Cadastre.
Calculation of the objective increase of the tax base of the value of the land
If the second method is chosen to calculate the surplus value, only the following operation will have to be done:

Cadastral value of the land X Coefficient determined by each Town Hall

Thus, as we explained before, the cadastral value can be obtained in the last IBI receipt or in the online office of the Cadastre and the coefficient that each City Council will establish will depend on the time that the former owner has owned the home. Thus, the Ministry of Finance establishes the following coefficients:

Less than a year = 0.14
1 year = 0.13
2 years = 0.15
3 years = 0.16
4 years = 0.17
5 years = 0.17
6 years = 0.16
7 years = 0.12
8 years = 0.10
9 years = 0.09
10 years = 0.08
11 years = 0.08
12 years = 0.08
13 years = 0.08
14 years = 0.10
15 years = 0.12
16 years = 0.16
17 years = 0.20
18 years = 0.26
19 years = 0.36
20 years = 0.45

Originally posted 2023-02-08 10:43:18.