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Practical Income Manual 2022.

Example: Transfer of asset-related elements subject to tax

Don BLT, a manufacturer of wooden furniture, which determines the net income of its activity in the simplified modality of the direct estimation regime, has transferred on June 30, 2022, a property related to its activity for the amount of 210,000 euros. On the occasion of the sale, it has paid 3,000 euros as Municipal Tax on the Increase in Value of Urban Land and 10,000 euros to the real estate agency that mediated the operation.

The property was acquired by inheritance in 1985, with the declared value for Inheritance and Donation Tax purposes being an amount equivalent to 18,000 euros. In the value verification file carried out by the Tax Administration, said value was set at an amount equivalent to 45,000 euros.

The property was rented from its acquisition until December 31, 1997, proceeding, on January 1, 1998, to affect the premises to the economic activity carried out by its owner. According to the IBI receipt, the cadastral value of the property in 1998 amounted to an amount equivalent to 54,000 euros, of which 40% corresponded to the value of the land.

Determine the amount and classification of the capital gain or loss obtained in said transfer, knowing that the owner of the activity has amortized said property using the maximum linear amortization coefficient established for the assets used.


Determination of the capital gain or loss obtained :

Transmission value (210,000 – 13,000) = 197,000

Acquisition value:

Impact value: (1) = 54,000

(-) Amortization: From 1998 to 2021: 3% (60% s/54,000) x 24 years = 23,328

(-) Amortizations for fiscal year 2022: 1/2 [3% (60% s/54,000)] = 486

Total amortizations: (23,328 + 486) = 23,814

Total acquisition value (54,000 –23,814) =30,186

Capital gain (197,000 – 30,186) = 166,814

Note to example:

(1) Since the property was affected prior to 01-01-1999, the value of the property for Wealth Tax purposes has been taken as the acquisition value. That is, the largest value of the following three: the cadastral, the one declared for the purposes of the Inheritance and Donation Tax and the one verified by the Administration for the purposes of this last tax. (Back)