8 Dec, 2019 @ 15:55
1 min read

Adam Neale discusses Plusvalia and how land is valued and taxed in Spain


THE ‘Plusvalia’ tax is one that every property owner and new buyer should become familiar with.

First of all, this tax is levied on any increase in the value of the land your property stands upon when it is sold to a new owner.

It is important to note that the tax is only applied to the value of the land, and not to the property on it.

Furthermore, it only affects lands that are classified as urban, not those defined as ‘rustic’. Each municipality is responsible for collecting this tax themselves, although some of them may delegate its collection to the Provincial Revenue Board of Malaga.

Either way, the tax must be paid within 30 days of the property being transferred to the new owner.

In the case of a property sale, the seller must pay the tax.

If the property is left as an inheritance, then the person receiving the property is responsible for paying the tax.

IMPORTANT: For new owners and buyers, the Plusvalia tax is crucial to understand

The Plusvalia tax is calculated by multiplying the tax base by the tax rate: 

a) The tax base is the increase in value that the property has experienced during the time it has been owned by the seller. This increase is calculated by multiplying the cadastral value of the property at the time of its sale by the annual rate set by each municipal council (with the maximum limit established by law). The calculation is based on whole years, not on fractions of years.

b) The type of lien is the rate set by the municipal council, and there is a 30% limit established by law. There are, however, some variations depending on the years of ownership.

It is possible to estimate what you will owe on Plusvalia by visiting the relevant council’s web page, where you will find a handy tool to calculate it, but please be aware that this is only an estimate and not necessarily the exact final sum.

If the seller is not resident in Spain, the buyer’s lawyer will normally insist on withholding funds to pay the Plusvalia on the seller’s behalf to prevent the possibility of the buyer becoming liable for the Plusvalia in the event of non-payment.

What happens if the property sale price is lower than the purchase price? This situation often occurred during the recession when property prices fell.

However, the relevant fiscal laws decreed that there should be an assumption that there is always some increase in value. In the next article we will look at the legal changes that have taken place since then to make the system fairer although as we will see, in practice it remains problematic for non residents to get their money back.

Adam Neale (Columnist)

Adam Neale is the owner of Terra Meridiana, a real estate agency based in Estepona on the Costa del Sol covering areas such as Marbella, Estepona, Sotogrande and Benahavís. Adam has more than a decade of experience in the sales and rental markets and, as Property Insider for the Olive Press, will be providing useful advice for buyers, sellers, tenants and all those interested in living in southern Spain. You can contact Adam by phone at +34 951 318480, pay a visit to his office at 77 Calle Caridad, 29680 Estepona (Málaga) or just visit his website at www.terrameridiana.com

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Greta Cop25
Previous Story

OPINION: Spain may be hosting the pivotal COP25 climate conference, but Madrid may need to rethink its approach to sustainability

Boris Johnson
Next Story

As Boris Johnson sets his sights on No 10, Amanda Butler looks towards the sale of one of Mallorca’s grandest homes

Latest from Adam Neale: Property Insider

Go toTop

More From The Olive Press

BREAKING: Barcelona will remove ALL tourist apartments in 2028 in HUGE win for anti-tourism activists

BARCELONA’S city council has announced it will revoke all licenses

British tourist is stabbed to death outside a nightclub in Spain

A BRITISH tourist, 30, was stabbed to death outside a