The council sees danger goldmine of unrealized

06/12/2016

The tax on the increased value of urban land (IIVTU), better known as a capital gain, recorded an increase in the value of assets in stocks, ie basically the revaluation of flats. According to the calculations of appraisal companies, the flats between 2007 and 2015 lost between 30% and 45% of its value. But curiously income tax by municipalities fell, despite the sale of flats and its valor- did not stop growing.
According to data from the Ministry of Finance and, in the case of the City of Barcelona for collecting this tax amounted to 431milions euros in the last three years. In particular were 114.4 million in 2013, 145.7 million in 2014 and 169.7 million in 2015. This evolution is in line with the recovery of the housing market, but, remember, prices are still far below the years before the outbreak of the housing bubble.
This revenue, however, may be in danger. First, because the Constitutional Court has two unresolved issues of unconstitutionality made by judges on the subject of the Basque Country. And secondly because, regardless of the resolution, many courts have been in favor of the taxpayer and against municipalities. The argument is clear: you can accrue if there are tax losses, because the fact is taxed by which the gain you get from buying and selling floor at a time. And in recent years has gone the opposite: they have lost money.
The problem is the formula for calculating the tax. Part of the cadastral value and is applied to a coefficient based on the time that has enjoyed the good. The resulting amount puts the tax rate, which varies according to the council, but the maximum is 30%. This means that although the apartment has lost value always comes to pay. But many among the courts which the Court of Justice of Catalonia in Barcelona and several Courts have ruled that the taxpayer is given reason and cancels the settlement.
formula wrong
Álvaro Benejam lawyer firm BMO has brought many cases of this kind, indicates that the problem is that the formula for calculating the tax base was made "at a time when the value of apartments rose forever." According to his calculations, the Barcelona City Council capital gains payments have increased by 20% every year since 2012. But although the majority of taxpayers who have recourse end up winning the lawsuit, "only 1% of those affected claim return and, therefore, municipalities are left unclaimed money are not. "
Because, according to this lawyer says, 95% of the cases in which an appeal just winning. However, you must first settle the tax claim must be presented and then, coming to court if necessary to get the refund. "Otherwise -indica lletrat- the City Council could initiate legal means and even seize the accounts of the taxpayer."
431 million in three years
The lawyer explained that the payment of this tax is mostly smallholders because large operators of real estate market make their claims. Some council such as Navata (Alt Emporda) has decided not to collect this tax, but most councils have with the current formulation, forcing taxpayers to pay but have had no earnings. To make them an idea, the City Council has raised the IIVTU 431 million for the last three years. And according to data from the Spanish government in 2015 tax revenues contributed 429 million euros to municipalities Andalusian Catalans 405 million, 346 million to the Community of Madrid and 256 million in the Valencian Country.
Data collected by BMO Lawyers are clear. From January 2009 to January 2014 the total revenue gains of Spanish municipalities increased by almost 1,000 million euros. By contrast, house prices fell by almost 500 euros per square meter.
"From 2008 to 2015 the average price of housing in Spain has fallen by 30%, and even then, raising the capital gains of municipalities has increased approximately 100%," says Benejam.
To avoid the perverse effect that has the formula for calculating the capital gain, based on the assessed value, Alvaro Benejam believes it would be adjusted to make a comparative valuation, ie, that qualified calculate how much it was worth at the time of the floor and the acquisition, based on this assessment to establish whether the owner actually had gains or losses during the period in which the asset is ready.