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 byelaws of 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.
FAQs - Frequently asked questions
1. When I sold my house, the buyer agreed to pay all taxes and costs for deeds. Why does the public administration demand I pay the IIVTNU?
This is because, in line with the Texto Refundido de la Ley Reguladora de las Haciendas Locales (Revised Text of the Regulatory Law of Local Revenue Agencies), the seller is responsible for this tax.
The Ley General Tributaria (General Tax Law) establishes that the agreements reached by the parties in a legal negotiation do not affect the public administrations. This means that the seller must pay the IIVTNU, and if, in an official public document, it is stated that this tax must be paid by the buyer, the seller must demand payment. If the buyer does not pay, the seller should go take the matter to the civil courts.
2. My partner and I have separated, and in our separation agreement we have arranged that the property will be handed over to me. Must I pay IIVTNU?
This is a case of exemption, and the transfer is not subject to tax. However, it should be remembered that, if the property is later sold, the period for calculation of the tax is from the moment the property was acquired, without taking into account the transfer as a result of the agreement on separation.
3. I want to merge my company with that of a friend. Do we have to pay capital gains tax for the addition of immovable property of either of the two companies?
This is another exemption, in cases of a company merger, take-over or spin-off, as for economic additions of branches of the activity, as established in the Ley del Impuesto de Sociedades (Corporation Tax Law).
4. What happens if I forget to present my declaration within the deadline and I present it a few days late?
Tax regulations establish that, in these cases, the Administration can apply a surcharge for late payment, which can be between 5% and 20%, depending on the delay in presenting the declaration.
If the declaration is not presented, the Administration can also start sanctions procedures, and the surcharge can be up to 50% of the final tax amount due.
5. When a member of the family died, none of us who inherited have reached an agreement as to what was left to us in the will. We know we have to present a declaration, but we are not clear as to who now owns the assets subject to capital gains tax. What should we do?
In transfers as a result of death, there is a period of six months to make the declaration. If during this time, no agreement has been reached by those inheriting, an extension of six months can be requested to make the declaration.
6. I bought a property from a foreigner and paid the capital gains tax. Now I have sold it to a Spaniard and I have been told that I must pay the capital gains again. Must it always be me who pays?
The Texto Refundido de la Ley Reguladora de las Haciendas Locales (Revised Text of the Regulatory Law of Local Revenue Agencies) establishes that, in onerous transfers, the tax should be paid by the seller, with the exception of non-residents, in which case the buyer must pay.
This is why you had to pay the capital gains tax when you bought the property from a foreigner and again when you sold it.