Plusvalia - Municipal tax on sale of property in Spain
10.03.2019If you sell a house in Spain, you will pay plusvalía municipal. The plusvalía is a municipal capital gain tax on the transfer of real estate. In contrast to the national added value tax, the municipal added value tax is not based on the actually realized added value.
Read more about the national capital gains tax in Spain.
How is the municipal plusvalía calculated?
The cadastral value at the time of your purchase is the basis for the calculation. After purchase, the cadastral value is increased annually. The following formula provides an illustration:
- Cadastral value * percentage of value increase * number of years hold * rate.
The percentage and the rate are determined autonomously by the municipality.
Ultimately, you pay tax on the difference between the current and the initial cadastral value, regardless of the actual value increase. So: the longer you own your property, the higher the taxable base and the final tax to be paid.
If you sell with a minus value, and therefore suffer a loss, you will no longer pay any plusvalia since 2017. If you have recently sold real estate in Spain and have paid Plusvalia, you can even reclaim the municipal tax. In most cases, the tax is only a small amount, which makes it worthwhile to take action.
Exemption from paying Plusvalia
As discussed above, the municipal tax applies in principle to any transfer of real estate. The plusvalía will also apply to inheritances and gifts. There are, however, a number of exemptions. An exemption that is important for practice applies if the real estate is transferred between spouses, for example during a divorce.
Who pays the plusvalía?
In principle, the seller pays this tax. It can be agreed that the buyer will take over the tax. Parties have 30 days after sale to pay the tax. In the event that a seller non-resident does not pay the tax, the municipality can recover the amount due from the buyer. It therefore occurs that the buyer deducts the municipal tax from the selling price.
Decision
The plusvalía is difficult to calculate because the tax is based on criteria of the municipality. If you want to know how many plusvalia you own, you can go to the local town hall to have the tax calculated or ask your lawyer.
Do you have any other questions about the buying process for your second stay in Spain? Then contact our real estate agents