Municipal capital gains tax and expenses deductible from capital gains on real estate sales

When selling a property, calculating the capital gain or loss is a critical step in the Personal Income Tax (IRPF) declaration. A recurring question among taxpayers is whether certain costs associated with the transaction can be used to reduce the transfer value and, therefore, the taxable base of the tax.

What the DGT has resolved

The Dirección General de Tributos (DGT) has clarified that the transfer value is the actual amount of the disposal, but from this amount, the expenses and taxes inherent to the operation that have been paid by the transferor may be deducted. According to the established criteria, the following are included within these deductible expenses:

• The Tax on the Increase in the Value of Urban Land (municipal capital gains tax).
• Notary and registry fees for the cancellation of the mortgage.
• Energy efficiency certificates.
• Certificates of debts with the homeowners' association.

For this deduction to be valid, the expenses must correspond to the ownership share of each owner and must be properly justified through the relevant documentation.

What it means for you

For individuals selling a property, this criterion represents an opportunity to optimize the calculation of capital gains. By including the municipal capital gains tax and other operating costs as part of the deductions, the transfer value decreases, which can result in a lower capital gain and, consequently, a tax burden more closely aligned with the economic reality of the transaction. It is fundamental that any expense intended to be deducted is duly documented and directly linked to the transfer of the property.

What you should do

In a real estate sale transaction, it is necessary to collect all documentation proving the payments made. This includes invoices for certificates, proof of payment of the municipal capital gains tax, and notary fees for cancellation. Each owner must ensure that the portion of the expenses they deduct matches their percentage of ownership in the property. Since the application of this criterion depends on the correct justification of each amount, it is necessary to assess each particular case to ensure compliance with current regulations.