Municipal capital gains tax (plusvalía)

Plusvalía municipal is the common name for the tax on the increase in value of urban land. It is levied by the town council when a property changes hands, and many people only discover it when they sell or accept an inheritance.

As a general rule, it arises when ownership of an urban property is transferred:

• On a sale.
• On an inheritance.
• On a gift.
• On other transfers of ownership.

As a rule, the seller pays on a sale and the recipient on inheritances and gifts, though there are exceptions, and some transfers are not taxable or are exempt.

The calculation takes into account the cadastral value of the land and how long the property was owned. Following recent legislative changes, there are different calculation methods and it is worth comparing which is more favourable. Since the Constitutional Court's 2021 ruling, the objective and actual methods coexist; we make that comparison for you.

If you sold for less than you paid, there may have been no increase in value and the tax may not be payable. We review the purchase and sale deeds to check. This has to be evidenced to the town council with the appropriate documents.

The tax is filed with the town council where the property is located, and each municipality may have its own self-assessment or declaration system. 30 working days for sales and gifts; six months for inheritances, extendable up to one year.

If you have received an assessment from the town council and disagree with the amount, it can be reviewed. There are ways to appeal, but with short deadlines from notification.

Plusvalía is not the only tax on a sale or an inheritance. On a sale, the seller must also declare the result in their income tax return. On an inheritance, inheritance tax is added. Looking at everything together lets you know the real tax cost from the outset.

• Assuming it is only payable when you make money on the sale, without checking the calculation.
• Not comparing the available calculation methods.
• Forgetting the tax on an inheritance until the council's demand arrives.
• Paying an assessment without checking whether the council's figures are correct.

• The deed by which the property was acquired, with its acquisition date and value.
• The sale or gift deed or, for inheritances, the death certificate and the will or declaration of heirs.
• The latest property tax (IBI) receipt, showing the cadastral value of the land.
• The ID or NIE of the transferor and the acquirer.

With this information we calculate the tax, explain the result to you and file it on your behalf.