Monday, November 29

What is home equity capital?

Calculation of capital gains in the purchase of a home.

Calculation of capital gains in the purchase of a home.

When selling a property, the Tax on the Increase in the Value of Urban Land, better known as municipal capital gain, must be settled before the town hall where the house is located. It is regulated by the Royal Legislative Decree 2/2004, of March 5, which approves the revised text of the Local Finance Regulatory Law. Your task is to tax the increase in the value of the land on which the property is located over the years, from the moment of its acquisition to the moment of its transmission.

Calculation of home equity

For its calculation, it is necessary to know how much the value of the land has increased, that is why the number of years elapsed since the purchase of the property is multiplied by a regulatory coefficient, a percentage that represents a revaluation rate and that is set by municipal ordinances each anus. Then, it is multiplied by the cadastral value of the land, a figure that is easily found on the receipt of the Real Estate Tax (IBI). Finally, a tax rate is applied, which cannot exceed 30%.

This is a not inconsiderable amount that must be paid within a period ranging from 30 days to the year, depending on the type of transmission in question. Thus, when it comes to a sale, the term is 30 days, while, if it is an inheritance, the term goes up to six months, which can be extended up to one year. There are cases in which you are exempt from the obligation to pay the capital gain, as in daciones in payment, protected or historical buildings, when the taxpayer is an NGO, transmissions of the State or of the Sareb, in cooperatives, etc.

The seller is the taxpayer of the capital gain in the sale and purchase operations. However, if the seller does not reside in Spain, then the buyer will be responsible for this tax. The person responsible for paying it must go to the town hall to pay said tax. However, in the city councils of large capitals, the procedure is usually facilitated through the Internet, being able to generate a self-assessment form to pay it at a branch of a collaborating bank.

After the 2008 crisis, the house lost value. The economic situation led to an increase in unemployment, forcing many owners to sell one or more properties to obtain liquidity. As house prices fell, many sold at a loss, which did not prevent the city from collecting a capital gain. That is why the constitutional Court ruled concluding that, when selling a property for a price lower than the one that was purchased, you are not obliged to pay the capital gain. When this type of taxation is given on goods that have not increased in value or the payment of an amount that exceeds the net profit of the sale is required, everyone who faces this tax must claim its return, but first pays it to avoid fines.

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