The Directorate General of Taxes (DGT) in its Consultation V0983-22 of 4 May 2022 analyses various questions regarding the calculation of the taxable amount of the municipal capital gain after the purchase of land by a real estate developer, subsequent construction and sale of the properties.

In order to determine the acquisition value of the land of each of the properties transferred and thus be able to make a comparison with their value upon sale, the percentage that the property transferred represents in relation to all the properties included in the deed of horizontal division must be applied to the acquisition value of the initially acquired land.

The transfer value of the land of each of the transferred properties is determined as follows:

– First, the proportion that the cadastral value of the land represents in relation to the total cadastral value of the property on the date of accrual of the tax, i.e. the date of transfer, must be calculated;

– This proportion is to be applied to the transfer value of the property as stated in the title documenting the transfer.

If on the accrual date the property has no cadastral value and the taxpayer understands that there has not been an increase in the value of the land – resulting from comparing the transfer and acquisition values – or that the increase may be lower than the taxable base determined in accordance with the objective calculation rules, he/she may allege this to the local town hall when notifying the transfer so that when the cadastral value has been determined, the relevant settlement can be made.

The taxpayer would maintain his right to present allegations in the event that he contests the liquidation if the municipality omits the above.