The Board of Ministers for the Central Government has approved a new capital-gains tax on property sales to replace the one thrown out by a High Court.

The Tribunal Constitucional threw out the Plusvalia considering its calculation method illegal because in some cases citizens had to pay this capital gains tax where there had been no actual capital gains; i.e. the sellers lost money because the value of their property had dropped.

Government Spokeswoman, Isabel Rodríguez García, said that the Board had come up with a new taxation method that would allow this local tax to “perfect the previous law.”

Minister Rodríguez assured, “citizens will not have to pay tax when it is not necessary.”

The Central Government rushed this new system through as Plusvalia is one of the main sources of income for town councils: since the Constitution Court’s decision came through on the 26th of October, town councils have not been able to levy this tax.

In fact, those property owner who sold their properties between the 26th and now, successfully avoided having to pay this capital-gains tax.

The Royal Decree that governs this offers two options when it comes to paying their Plusvalía: you can calculate the difference between the price paid upon acquiring the property and the price upon selling; alternatively you can use the new cadastral coefficiences, which will be updated yearly.

This gives municipal administrations a certain amount of lee way, allowing them to adopt the new law or adapt the existing one (so that it does not include elements that the Constitutional Court found abusive or illegal). They will be able to reduce the cadastral value of properties by 15% and have at least six months to adopt the new law.

Whichever way they choose to do it, the new system comes into force this week – it will most probably be published in the Boletín Oficial del Estado today.

(News: Spain)