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Selling a property involves associated expenditures and taxes that the seller have to face. One of them is present in all buying / selling operations. It is called the capital gain value.

When saling a property, two parties are always involved – the buyer and seller -, and both have to assume expenses associated with the transaction. Although most references to the costs affect the buyer of the property, there are a series of tax obligations on the seller. From Hermes & Mathew we explain in detail everything related to this tributes.

Selling a property. What is the capital gain value?

Municipal capital gain value is the name given to the Tax on the Increase in the Value of Urban Land. This tax is the increase of value of urban land through the years -until a maximum of 20- in which the taxpayer has been the owner of this house. This tax does not apply on rural real estates and there are certain exemptions and bonuses that will be explained in this blog.

Who has to pay the capital gain value?

As explained before, this is a tax concerning the seller and, therefore, it has to be the individual, company or entity that assumes this role who must do the payment. Now, as stated by the Institut Municipal d’Hisenda de Barcelona (Ministry of Finance in Barcelona), if the transmitter or seller is somebody who does not reside in Spain, the payment will be assumed by the person who acquires the property. In the case of inheritance or donation, the new owner must pay the tax.

How and where should this tax be paid?

The City Council of the town where the property is located, is the responsible administration for collecting this tax, therefore, this is where it should be paid. In fact each municipality owns a Fiscal Ordinance where everything related to the surplus value is explained in detail. In the case of Barcelona, its City Council has enabled a section within its website where the procedures are explained. Please check all the information, here. In any case, self-assessment of this tax is easy and can even be done telematically.

When is the deadline for paying the capital gain?

After selling a property, there are 30 working days from the selling date to proceed with the payment of this tax. In case of an inheritance, the term is six months from the person’s decease, whicht can be extended up to one year, as long as it is requested in writing within the first six months.

Can a lower amount be set?

Yes, less can be paid although, it is the City Council who has the power to regulate under what assumptions the amount can be reduced -bonifications- and even in which cases there are exemptions from paying this tax. All of this must be reflected in writing in the corresponding Fiscal Ordinance.

In general terms, the transfer of real estate between spouses or, in favor of the children as a result of compliance with judgments in cases of nullity or matrimonial divorce, are exempt from paying surplus value. Also transfers as historical-artistic group, or that have been declared individually of cultural interest, when their owners can demostrate that they have done their work for conservation, improvement or rehabilitation of the mentioned properties, when certain conditions are met.

As there are specific assumptions and particularities, Hermes & Mathew always recommends to always rely on a subject matter expert.

Finally, when a property generates profit losses is sold, surplus value has to be payed anyway?

The Tribunal Constitucional (Constitutional Court) presented its opinion on the issue a year ago. It has ruled that no surplus should be payed after selling an apartment, when the sale is settled at a loss. Although there is already jurisprudence, the municipalities continue charging it. To avoid the surcharge, the solution offered by the experts is to proceed to its liquidation by stating in the deed that the property has been sold at a loss, and then claiming for it to be returned.

At Hermes & Mathew we also offer advise on any transaction related to the purchasing or saling of properties. Please remember we also provide with a wide portfolio of properties for sale, rent and tourist flats in the best areas of Barcelona.