Example 1: Determination of the amount of the gain derived from the onerous transfer of a property acquired prior to December 31, 1994
Don BPT On October 10, 1992, he acquired a villa for an amount equivalent to 100,000 euros, paying an amount equivalent to 7,000 euros as Property Transfer Tax. The remaining disbursements made by Mr. BPT On the occasion of the acquisition, they amounted to the amount of 1,000 euros for notary and registration fees.
In July 2012, he contracted the construction of a swimming pool, as well as the remodeling of the interior of the chalet. These works were carried out during the month of July and their amounts amounted to 75,000 euros, including VAT .
On February 3, 2021, he sold the villa for 500,000 euros, of which 150,000 euros correspond to the improvement carried out in 2012, paying the amount of Municipal Tax on the Increase in Value of Urban Land. 15,000 euros. The chalet has not been rented at any time.
Determine the amount of the capital gain or loss obtained in said transfer, taking into account that the taxpayer has not made a transfer since 2015 of assets to whose gain the ninth transitional provision of the Personal Income Tax Law would be applicable
Since improvements have been made to the chalet in a year other than that of its acquisition, the part of the disposal value that corresponds to each component must be distinguished, that is, to the chalet and the improvement, in order to apply the reducing coefficient corresponding to the gain. property derived from the transmission of the chalet.
The determination of the capital gain or loss obtained will be made by distinguishing what corresponds to the chalet and what corresponds to the improvement.
1. Determination of the capital gain corresponding to the villa (sale date 03-02-2021).
Determination of the capital gain obtained:
Transmission value (500,000 – 150,000 – 15,000) (1) = 335,000
Value of acquisition (100,000 + 7,000 + 1,000) (2) = 108,000
Capital gain (335,000 – 108,000) = 227,000
Determination of the capital gain generated before 01-20-2006):
Capital gain generated prior to 01-20-2006: (227,000 ÷ 10,343) x 4,849(3) = 106,422.03
Capital gain susceptible to reduction (4)
Maximum limit of transmission values: 400,000
Accumulated transfer value of other assets transferred with the right to reduction since 01-01-2015 = 0
Transfer value of the asset element to which DT9 Law of Personal Income Tax applies = 335,000
Capital gain susceptible to reduction = 106,422.03
Number of years of tenure as of 12-31-1996: up to 5 years
Reduction due to abatement coefficients (33.33% x 106,422.03) = 35,370.46
Reduced capital gain
Reduced capital gain (106,422.03 – 35,370.46) = 71,051.57
Determination of the capital gain not susceptible to reduction (generated as of 01-20-2006):
Capital gain generated after 01-20-2006: (227,000 ÷ 10,343) x 5,494(5) = 120,577.97
2. Determination of the capital gain corresponding to the improvement:
Transfer value: 150,000
Acquisition value: 75,000
Capital gain (150,000 - 75,000) = 75,000.00
3. Computable capital gain (71,051.57 + 120,577.97+ 75,000.00) = 266,629.54
Notes to the example:
(1) From the part of the transfer value corresponding to the chalet (350,000 euros), the amount paid as Municipal Tax on the Increase in Value of Urban Land (15,000 euros) has been deducted. (Back)
(2) Remember that as of January 1, 2015, the update coefficients that were applied to determine the updated amounts of the components of the acquisition value are eliminated. (Back)
(3) The capital gain generated between the date of acquisition of the villa (10-10-1992) and January 19, 2006, both inclusive, is determined by proportionally distributing the total capital gain (227,000) between the number of days elapsed (10,343) between the date of acquisition of the chalet and the date of its transmission (02-03-2021), with respect to the total number of days (4,849) between the acquisition date and 01-19-2006, both inclusive. (Back)
(4) As the maximum applicable limit on the transfer value is 400,000 euros and, in this case, the transfer value of the chalet is 335,000 euros and, furthermore, it is the first transfer made by the taxpayer since January 1, 2015 to whose capital gain the transitional regime may apply, the corresponding reducing percentages will be applied to the entire amount (106,422.03 euros) of the capital gain generated prior to 01-20-2006. There remains a remainder of 65,000 euros of the maximum limit (400,000 – 335,000) that may be used in the next transmission to which the ninth transitional provision of the Personal Income Tax Law is applicable. (Back)
(5) The capital gain generated from January 20, 2006 until February 3, 2021, on which the transfer of the villa takes place, is determined by proportionally distributing the total capital gain (227,000) between the number of days elapsed (10,343). between the date of acquisition of the chalet and the date of its transmission (02-03-2021), with respect to the total number of days (5,494) between 01-20-2006 and the date of transmission.
This last amount can also be determined by subtracting from the total capital gain obtained the part generated prior to 01-20-2006. That is, (227,000.00 – 106,422.03 = 120,577.97) profit that cannot be reduced. (Back)