The Urban Land Tax Capital Gain, Declared Unconstitutional when sold in losses

The Constitutional Court considers that when there is a fall in the value of the land, it should not generate the tax or obligation for the taxpayer to pay it while transmitting their property. It is one of the most important sources of incomes for municipalities.

Municipal capital gains are a direct tax imposed on the alleged land value increase, as a consequence of its transfer (sale, inheritance, donation, exchange etc), it is one of the most important sources of income for municipalities.

Specifically, the Local Finance Regulatory Law establishes that the goodwill is calculated based on the increase that will have the value of the land in the years following its transmission and not in the value that has had since its acquisition.

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Numerous judgments have been handed down in different courts and tribunals of the different Autonomous Communities which determine that if a real and economic increase in the price of a property has not been granted in the transfer of a property, the budget set by the Local Finance Act to accrue that tax.

This circumstance, in transactions in which there is a loss of property, would violate Article 31 of the Constitution: “All will contribute to the maintenance of public expenditures according to their economic capacity through a fair tax system inspired by the principles of equality and progressivity that, in no case, will have a confiscatory effect. ”

“The immediate effect is that the municipalities will no longer be able to ignore the resources of the taxpayers in which they indicate that they have sold in losses.” So far they did not enter to discuss if there had been an increase in value of the land or not. To apply the formula. The Constitutional, although referring to the normative foral, has just stated that it is unconstitutional to apply the formula systemically, without taking into account situations in which it has been sold in losses, and without allowing the taxpayer to prove it.

Information picked up by idealista

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