IIVTNU – Capital Gains Tax on Property Transfer

What is IIVTNU?

IIVTNU is a direct tax levied on the increase in value of immovable property.

The increase is registered on the property when there is transfer of ownership in any way, or constitution or transfer of any easement which affects the property.

To establish the tax base, only the cadastral value of the plot of land is taken into account. Cadastral values of built structures are not included.

Who must pay this tax?

The person liable for paying this tax depends on the type of transfer:

  • For an onerous transfer (buying and selling, exchange of property, etc.), the tax is paid by the seller.

    Exception: When, in the case of an onerous transfer, the seller's place of residence is not in Spanish territory, the buyer is required to pay this tax.
     
  • For a lucrative transfer (inheritance, donation), the tax is paid by whoever obtains the property (the acquiring party).

Note: Any other agreement reached by the parties involved, contrary to those stipulated, will not be admitted by the authorities, and will in no way alter tax liabilities, without affecting legal consequences in the area of private law.

When must it be paid?

IIVTNU is due when the transfer is carried out and therefore tax liability exists from that point.

The procedure is carried out on the basis of a tax statement from the liable persons, who must notify the council where the transferred real estate/property is located within a period of 30 working days from when the transfer is made.

Inheritances: When the transfer is the result of an inheritance, the inheritor has six months from the day of death to notify this fact. Under special circumstances an application can be made to extend the period for notification to one year.

How much must be paid?

The total amount of capital gains depends on the cadastral value of the land and the nature of the transferred right.

In the case of the transfer of property, the cadastral value of the land will be applied. In the case of transfer of rights, such as usufruct, it depends on the age of the person involved.

In the case of transfer of the right to build one or several storeys on top of or under a building, it depends on proportion percentage as a part of the whole building assigned in the transfer deed.

When the immovable property is located in a municipality that has been subject to a cadastral review within the previous five years, the local council will set, in its tax byelaw, a legal reduction on the cadastral value of the land, which can be between 40% and 60%. If the council does not do this, then the 60% rate is applied.

Several coefficients are applied to this tax base during a maximum period of 20 years tenancy of the property. All years count as a full year. The coefficients are approved by the local councils in the corresponding tax byelaws.

Finally, the local councils must approve a taxation rate to the result of the above.

In the case of death, tax relief can be applied to the amount due in profitable transfers favouring adopted and own children, spouses, forebears and adoptive parents. This relief is optional and must be recognised in the council's tax byelaw.

Where and how must it be paid?

The liable taxpayers must submit a statement to the local council of the municipality where the transferred property is located within a period of 30 working days from the moment the transfer is made.

Exception/Inheritance: If the transfer is the result of an inheritance the period for submission of the statement is six months, and can be extended to one year if liable persons apply for an extension.

Local councils can choose to allow self-assessed payment by liable parties or a tax settlement.

Furthermore, notaries are required to inform local councils of any transfers of property in their area so that the data on the tax statement can be verified.

Regulation of IIVTNU

IIVTNU is regulated by:

  • The Texto Refundido de la Ley Reguladora de las Haciendas Locales (Revised text of the Regulatory Law of Local Revenue Agencies), approved in the Royal Legislative Decree 2/2004, of 5 March (articles 104 to 101);
  • The tax byelawsof the local councils, where taxation percentages and relief can be set (within the limits established by law) and concrete matters and formalities for management and collection are determined.