ITP CATALUNYA: Reduced taxation for real estate and promoters

The bonuses to real estate and promoters to be taxed by ITP Catalunya
Do we all pay the same tax on real estate sales? Do not.

There are several cases, and each autonomous community has its own rules. In the case of ITP Catalunya, a reduced rate is applied in the form of discounts for transmissions or sales of homes to people - whether physical or legal - who carry out a business activity related to the real estate sector and, therefore, apply the General Accounting Plan (PGC) of the real estate sector.

In other words, in Catalonia real estate developers enjoy a bonus of 70% of the tax rate when buying second hand homes to resell them in the short term.

How is the bonus on the ITP Catalunya regulated?

Through article 13 of Law 31/2002 of fiscal and administrative measures, which establishes the necessary requirements to obtain the bonus:

The transfer is made to a buyer -either a natural or legal person- who carries out a business activity in accordance with the rules established by the General Accounting Plan (PGC) of the real estate sector.
That the acquirer incorporates the home to its current assets (stocks) in order to sell it.
That its main activity is the construction of buildings, the real estate development or the sale of real estate on its own. (NO REFORMS).
That the subsequent sale of the entire home and its annexes be made to a company that meets the requirements of section a), or to an individual to cover their accommodation needs, within a period of 5 years from the date of acquisition.
Similarly, Article 13 establishes that the bonus is provisional and should be recorded in a public deed that the purpose of the purchase is for subsequent sale to a private individual for use other than housing. Likewise, in Catalonia a maximum term of 5 years is established for the sale of this currency.

And if the operation is not carried out within the prescribed period, do I have a sanction?

Well the answer would be NO. If after the indicated period of 5 years the transaction has not been carried out to the professionals indicated during this article, the taxpayer (taxpayer obligated to pay) will have to present a complementary declaration or self-assessment and without a bonus where the interests must also be paid of delay, not being applicable sanction for the case of voluntary presentations.

Special rules to apply the ITP Catalunya bonus

Article 13 also establishes special rules to apply the bonus:

When homes that are part of an entire building are transferred under a vertical property regime, the bonus is only applicable in relation to the area that is assigned as a dwelling in the subsequent horizontal property division, excluding the area dedicated to commercial premises.
The bonus is applicable to the house and the land in which it is located, provided that they form the same registered property and the subsequent sale within the term of three years includes all of it.
In the case of acquisition of undivided shares, the initial day of the three-year term referred to in section 2 is the date of acquisition of the first undivided part
The following are expressly excluded from the application of this bonus:
-The adjudications of real estate in judicial auction.

- Transfers of securities that incur the assumptions referred to in 17.2 of the revised text of the Tax Law, approved by Royal Legislative Decree 1/1993, of September 24.

As a conclusion, from the Central of the Business we have made some bullish forecasts of the real estate market for this year 2017, valuing that both the real estate and the promoters must take into account more than ever this tribute to not fall back on the same mistakes as these years precedents Therefore, it is very important that professionals in the real estate sector bear in mind the fiscal cost involved in each operation, given that the rise in prices is not expected, as we witnessed between the years 2000 and 2007 considered the golden years of the real estate sector.