Author: Lidia Orellana

Source: tododisca.com

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Receiving a property through inheritance involves several administrative steps and taxes that need to be settled before the full legal ownership is acquired. It is crucial to understand all the procedures to avoid problems during the process, as non-compliance can sometimes lead to financial penalties. Among the most important payments are the municipal capital gains tax and the Inheritance Tax.

It is worth noting that an inheritance includes all the assets, rights, and obligations of a person that do not extinguish upon their death. Among these are real estate properties or ‘real estate’. These are items that are part of the land and, therefore, cannot be moved without destroying or deteriorating them. In other words, they have a fixed position and remain immobile.

Inherited real estate can include houses, apartments, garages, or any immovable property. All urban properties are required to pay municipal capital gains tax. This tax is a local tax that levies the increase in value experienced by a property from the time it is acquired until it is transferred. If the inherited property is rural, this type of tax does not apply.

Cost of Municipal Capital Gains Tax for an Inherited Property

The official name of the municipal capital gains tax is the Tax on the Increase in the Value of Urban Land (IIVTNU). While it is commonly associated with property purchases, it also applies to inheritances and donations. It only needs to be paid for urban properties, i.e., houses, apartments, garages, or any type of building located on urban land.

The amount to be paid for the capital gains tax on an inherited property is not a fixed sum. It is based on a calculation that takes into account the following elements:

Tax Base

The tax base is the increase in value that the inherited property has experienced over 20 years. In other words, it considers the number of years since the deceased acquired the property until you inherit it. If more than 20 years have passed, the amount to be paid will not increase. To calculate this, two factors must be considered:

1. The cadastral value of the land at the time of inheritance. This refers to the land’s value and can be found on the most recent property tax (IBI) bill.

2. The percentage increase. This is calculated by multiplying the number of years since the property was acquired until the inheritance by a coefficient established by each municipality. This coefficient cannot exceed: 3.7% if the period is from 1 to 5 years, 3.5% up to 10 years, 3.2% up to 15 years, and 3% up to 20 years.

Tax Rate

This rate is determined by each municipality, so it depends on the location of the urban property. Generally, it is established that it cannot exceed 30%.

Therefore, to calculate the amount of municipal capital gains tax on an inherited urban property, you should:

1. Multiply the value increase—i.e., the percentage increase in a specific locality—by the number of complete years from when the property was acquired until it is inherited.

2. Calculate the tax base, which is the value of the land (according to the IBI bill) multiplied by the value increase.

3. Finally, multiply the tax base by the tax rate. This will be the amount you need to pay for the municipal capital gains tax on an urban property received through inheritance.