Thousands hope for refunds on property tax

Sold a home recently? You could soon be entitled to your capital gains back

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Although it is too soon to claim, thousands of people are already anticipating a refund of capital gains unfairly paid

By David Jackson

More than 10,000 property sellers across the province could expect a windfall after the constitutional court ruled that capital gains tax on sales where the vendor incurred a loss is unlawful.

The issue centres around a tax known as the plusvalía or IIVTNU (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana). The tax allows local councils to set a rate of up to 30 per cent of the profit made when selling urban property or land.

It is the way the tax is calculated that has been deemed unlawful. The tax is calculated on the rateable value of the land at purchase and at sale, not the declared purchase and sale price. This means that owners of properties whose rateable value has increased will always incur a theoretical capital gains, even if they can prove they sold the property for less than they paid for it.

Read more in this week’s print edition or go to e-paper

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