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What is the 'Plusvalía Property Tax' in Spain?

Selling your property in Spain? Of course the tax man will be involved with the usual and well understood 'capital gains tax' and Spain's version of 'Stamp Duty'. But, did you know that there is another applicable tax known as plusvalía?

This lesser known property tax is specific to Spain and is paid in addition to the two taxes already mentioned. Here we cover the basics of what you need to know, so that you can be fully prepared and know what to expect whether you are buying or selling a Spanish property.

Spanish Regional Property Taxes.

Spain is composed of 'atonomous regions' which are somewhat independant of the Spanish state and have their own local tax regulations and laws. Therefore the total tax you will pay will depend very much on which region of Spain you are buying or selling in.

Spanish Land tax, or Plusvalía

Plusvalia tax is a municipal tax levied on the increase in the value of the land element of any property in the municipality. It is calculated on the number of years since the last purchase and sale transaction and is based on the Cadastral value alongside an index for each year elapsed.

The tax is payable by the property and therefore usually falls upon the seller to settle within 30 days of the sale transaction or 6 months if the transmission is produced from the estate of a deceased owner.

The cadastral land value used is obtained from the latest receipt for IBI, and it may surprise some, but it is not based on the actual price of the sale.

The tax is levied on the deemed increase in the value of the land that the property is built on, not the property itself.

Also, this tax does not only apply to property with its own land, but also appartments which are deemed to have benifitted price-wise from local developments. As like houses, they too have their own small plots of land underneath them.

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How to calculate the Plusvalía Tax

To accurately calculate the plusvalía tax in accord with the latest Spanish regulations, you should contact a tax or legal advisor. Any estate agent can help you with this. They will need the following information about the property:

  • Details of the property’s geographic/ regional location.
  • A recent IBI receipt indicating the current land value or, in Spanish: "El valor suelo".
  • The date the property was purchased.
  • The estimated sale date.

Once the property is sold, the plusvalía tax becomes due and is payable 30 days after you have completed the sale by signing the deeds at the notary.

It is very important to get good professional advice about the amount of tax you are likely to have to pay. The plusvalía tax has been quite contentious for many, as often the land on which the property stands has not gained in value or may have declined!

But the tax will still be charged nonetheless. Therefore, you cannot assume plusvalía tax will not apply. Consult with your tax or legal representative for an informed estimate and expert advice in advance.

Be sure to get professional advice about property sales taxes in Spain

Property sales and purchases are always complex no matter which country you are in. Spain is no different and as such a good dependable advisor with a good reputation is a must for foreign buyers.

Each region has its own tax issues to deal with, so make sure you receive good advice from a trusted source who is familiar with the local rules and procedures. With the proper advice beforehand, you can make sure plusvalía tax is properly factored into your financial plans.

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