A general strategy to reduce the size of the inactive space in extended Configuration Interaction calculations is presented. The approach is based on the use of local orbitals, obtained from a recently reported iterative method. Both occupied and virtual local orbitals are classified according to their topological nature. This criterion permits the elimination of all the orbitals centered on ligands distant from the "interaction area". This truncation reduces the size of the inactive space considerably and makes feasible calculations otherwise impractical. The procedure is illustrated by the determination of the magnetic coupling constant in two binuclear Cu(II) compounds. The results show that it is possible to recover 95% of the magnetic coupling value with only 10% of the total Cl space, pointing to the potentiality of the method. Additionally the local nature of the orbitals provides a way to control the physics of the coupling and to analyze the role of the external ligands in the interaction.