Capital gain on selling within a year now also taxed
Spain has new regulations in the field of municipal capital gains tax in November 2021. Capital gain tax is now calculated according to two methods. Sellers can choose to pay tax on the cadastral value or on the difference between the purchase and sale price. The capital gain in the event of a resale within one year will also be taxed from now on, in order to prevent speculation.
Sellers to choose calculation themselves
With the new regulations there is therefore more than one way to calculate the capital gains tax and it is up to the taxpayer to decide which method is applied in his or her case. Either the level of the tax is based on new coefficients that are determined annually and in which the reality within the housing market is taken into account. Or the seller may choose to have the amount of tax determined by the difference between the purchase and sale price, or the profit.
You don’t pay tax if you lose
One of the main impacts of the regulatory change is that sellers who experience depreciation in value will not be required to pay municipal capital gains tax. Previously, the capital gain was calculated on an annual basis and sellers who sold their objects at a loss also had to pay the tax. Until now, no capital gains tax was charged when a purchased home was sold again within a year, that too has changed with the new regulations.
Calculation based on cadastral value
The government has set the coefficients for those who choose to determine the tax based on the cadastral value for this year at 0.13 if the house was bought a year ago, 0.14 if the house is sold again within a year, up to to 0.45 for homes purchased more than 20 years ago. For homes that were used between 10 and 13, the lowest coefficient of 0.08 applies. The final calculations are determined by the municipalities, but are in line with the values set by the government.
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