Increase in the Value of Urban Assets (Plusvalia Tax) after receiving an inheritance.
If you have received real estate as an inheritance or donation, you should not forget the so-called “Plusvalia Tax”.
Next, we explain what the capital gain in inheritance and donation is and everything you have to take into account about this tax if you are going to receive an inheritance or a donation.
What is the municipal capital gain?
The municipal capital gain (Plusvalia Tax) is a local tax that levies the increase in value that a property experiences from the moment it is acquired until it is transferred.
The Tax on the Increase in the Value of Urban Assets (IIVTNU), which is the official name of the municipal capital gain, is usually related to the purchase of a home, however it also affects inheritances and donations.
What assets do I have to inherit to pay the municipal capital gain?
Only in the case of inheriting or receiving urban goods as a donation. That is, flats or houses, urban land, premises, garages …
Now, if what is received is a rustic land, you do not have to pay Plusvalia tax.
Who is obliged to pay?
The person obliged to pay the municipal capital gain is the recipient of the real estate.
In the case of an inheritance: the heir or legatee of the urban property will be obliged to pay this tax.
In a donation: the person obliged to pay the municipal capital gain will be the donee.
Who manages the Plusvalia Tax?
The City Council where the inherited or donated property is located will be in charge of managing the municipal capital gain.
There are two different forms to pay the tax:
1.- Self-liquidation of the Plusvalia Tax
The heir or the donee will present a statement with the City Council with the necessary elements to carry out the liquidation (tax base and tax rate).
Likewise, you must make the payment of the amount resulting from the self-assessment.
What documents must you present with the self-assessment?
If you have inherited a property of an urban nature, you must present the deed of acceptance of inheritance, or failing that:
- The testament or declaration of heirs.
- The certificate of last wills.
- Acquisition titles in favor of the testator or deceased.
- If you have received a donation of real estate, you will have to present the public deed of donation.
What is the deadline for submitting the self-assessment?
It will be different depending on whether it is an inheritance or a donation:
Inheritances: the term will be 6 months from the death.
Donations, the submission deadline will be 30 business days from the day the donation is made.
Can you request an extension of these deadlines?
Only in the case of inheritance is it possible to request an extension of another 6 months to file the Inheritance Tax.
The extension must be requested within the first 5 months of the submission period.
2.- Liquidation from the City Council
In this case, the City Council itself will notify the heir or donee of the settlement.
What should this settlement contain?
The amount to pay.
The term of payment.
The resources that can be made against the liquidation, in case of no disagreement.
How is the amount to pay calculated?
The elements necessary to calculate the amount to be paid for municipal capital gains are: the tax base and the tax rate.
Tax base
It is the increase in value that the inherited or donated property has experienced over 20 years.
To calculate the tax base, the cadastral value and the percentage of increase will be taken into account:
The cadastral value of the land at the time of receiving the inheritance or donation. This value can be found on the IBI receipt and refers to the value of the land.
The percentage of increase is calculated by multiplying:
The number of years elapsed from the acquisition of the property to the inheritance or donation.
By a coefficient established by each City Council, but cannot exceed:
- 3.7% without 1 to 5 years have elapsed.
- 3.5% up to 10 years.
- 3.2 to 15 years.
- 3% up to 20 years.
That is, the number of years elapsed since the testator acquired the property until you inherit it is taken into account. A coefficient determined by each City Council is applied to that period.
If more than 20 years have passed, the amount to be paid will not increase.
Tax rate
It is determined by each City Council, without it being able to exceed 30%.
Example of calculating municipal capital gains in an inheritance
Let’s take an example: your father buys a house in Seville in 2002. You inherit it in 2021. In the IBI receipt for 2021, the value of the land of the house is 30,000 euros.
Data for calculation:
Land value (IBI): 30,000 euros.
Full years elapsed: 19 years
Percentage of increase in Seville in 2021 up to 20 years: 3%
Tax rate in Seville in 2021: 26.8%
Calculation of capital gains:
Increase in value: 3% x 19 years = 57%
Tax base: 30,000 euros x 57% = 17,100 euros
Tax rate: 26.8%
Installment to pay: 17,100 x 26.8% = 4,582, 80 euros
Remember: the amount to be paid varies according to the City Council where the inherited or donated urban property is located.
What happens if there has been no increase in the value of the property?
In 2017, the Constitutional Court declared the unconstitutionality of certain articles of the Local Finance Law in the absence of increases in value.
In July 2018, the Supreme Court opens the possibility of proving that there has not been an increase in the value of the property transmitted to the town hall, or where appropriate, to the judicial body.
The proof corresponds to the heir or donee, who may use any kind of proof. For example: the difference between the acquisition value and the transmission value that appears in the corresponding public deeds.
However, there are many doubts that exist about whether or not the inherited or donated property has increased in value. In addition, the reform of the Local Finance Law is pending reform.
Ultimately, municipalities continue to demand the payment of the municipal capital gain and conflict cases increase.
It is best to have good advice from a specialist lawyer to avoid paying more and at the same time having tax problems