Newsletter 12 June 2024

RELATIONS WITH THE ADMINISTRATION:

TOWN HALL BUILDING PERMIT

To carry out renovations in an apartment that affect the facade, it is necessary to obtain a building permit from the town hall and the consent of the community of owners.

The procedures include:

1. Community Permission: Reforms that affect the facade, such as enclosing balconies, installing awnings, or changes to the cladding, require community permission. This agreement must be formalized in writing at a meeting of owners and requires a majority of 3/5 (4/5 in Catalonia).
   
2. Application to the Town Hall: With the permission of the community, the building permit must be requested at the town hall. The necessary documentation includes:

• License application with the technical project.
• Responsible declaration indicating community permission.
• (Optional) Agreement of the owners’ meeting.
  

The responsible declaration is valid for six months to start the works. If it is not started within that period, the process must be restarted. It is essential to have written permission from the community to avoid legal problems and possible sanctions, such as demolition of the works.

TAXES

I GIVE YOU THE LAND AND YOU GIVE ME A HOME

If you are the owner of a plot of land and a real estate developer offers you to build homes in exchange for giving you some of them, this operation is called “exchange of plot for future work.”

Exchange Process

1. Solar Delivery:

• The owner delivers the plot to the developer with a public deed and registration in the Property Registry.
• Upon completion of the work, the developer delivers the agreed homes to the owner of the plot.
• The exchange may also include a cash payment, becoming a “mixed exchange.”

2. Tax Implications:

• Income Tax: You must declare a capital gain or loss in the year of the exchange, based on the acquisition value of the lot and the market value of the homes or land.
• VAT: When delivering the plot, an advance payment for the homes is considered, and the developer will issue an invoice charging the VAT (10% of the value of the homes). It is advisable to agree on a monetary payment that covers this VAT.
  

Postponed Operation

If there is more than one year between the delivery of the plot and the receipt of the homes, you can take advantage of the deferred operations regime to declare the profit in the personal income tax for the year in which you receive the homes.

Example:

• Land acquisition: 300,000 euros.
• Value of the homes to receive: 500,000 euros.
• Additional payment from the developer: 50,000 euros (to cover VAT).
  

The taxable gain will be distributed between the years in which the payment is received and the homes, allowing part of the taxation to be deferred.

Recommendations

• Agree on a part in money to cover VAT.
• Apply for the deferred operations regime if the delivery of the homes is carried out more than one year after the exchange to optimize taxation.