There are mainly two taxes involved when selling a property in Spain: Capital Gain Tax and Plusvalia (Council) Tax. This article is going to refer only to the Plusvalia Tax as the Capital Gain Tax was covered on my previous article.
The Plusvalia (Council) Tax is a local tax in urban areas levied by Spanish Town Halls on property transactions (houses, commercials, plots, etc.) of whatever type (sale, inheritance, donation, etc.) based on the growth in the value of urban land. By law, the tax is payable by the vendor although in some cases, and by mutual agreement, the buyer may pay it.
The Plusvalia is a tax that requires an agreement of the Plenary Session of the Town Hall where applicable coefficients, tax rates, reductions, exceptions will be fixed inside certain margins established by law (Ley Reguladora de Haciendas Locales). On Inheritances and donations, it is the beneficiary the one obliged to pay while, in sale transactions, it is the seller (if the seller is non-resident in Spain, it is recommended that the buyer retains the Plusvalia tax amount that will be required to him if the seller does not pay) the liable party.
The Plusvalia is calculated as a function of the catastral value of the land and the number of years of ownership (up to a maximum of 20 years). The higher the catastral value and the number of years of ownership, the higher the tax.
Plusvalia tax = Catastral value of the land x Yearly percentage of value’s increase x Number of years of ownership x Tax rate
The yearly percentage of value’s increase and the tax rate are fixed by the Town Halls. They are established locally as:
Marbella: Yearly percentage of value’s increase: 2,4% Tax rate: 30%
Benahavís: Yearly percentage of value’s increase: 2,3% Tax rate: 20%
Up to now, when a Town Hall had updated the catastral values, usually with really high increases of the values compared to the existing ones, article 107.3 of the Law had established that on the following five years after the revision of the values, the Town Halls had to apply a deduction of 40 to 60 % to the catastral value. If a Town Hall had not that deduction established, 60% will be applied. Marbella’s Town Hall was exactly in this situation. However, a new Law passed in 2012 changed that situation allowing the Town Halls to eliminate those deductions. We will see how Marbella reacts to that new option.
Since each particular case is different, it is fully recommended that you check your own numbers with your lawyer.
The Plusvalia (Council) Tax is a local tax in urban areas levied by Spanish Town Halls on property transactions (houses, commercials, plots, etc.) of whatever type (sale, inheritance, donation, etc.) based on the growth in the value of urban land. By law, the tax is payable by the vendor although in some cases, and by mutual agreement, the buyer may pay it.
The Plusvalia is a tax that requires an agreement of the Plenary Session of the Town Hall where applicable coefficients, tax rates, reductions, exceptions will be fixed inside certain margins established by law (Ley Reguladora de Haciendas Locales). On Inheritances and donations, it is the beneficiary the one obliged to pay while, in sale transactions, it is the seller (if the seller is non-resident in Spain, it is recommended that the buyer retains the Plusvalia tax amount that will be required to him if the seller does not pay) the liable party.
The Plusvalia is calculated as a function of the catastral value of the land and the number of years of ownership (up to a maximum of 20 years). The higher the catastral value and the number of years of ownership, the higher the tax.
Plusvalia tax = Catastral value of the land x Yearly percentage of value’s increase x Number of years of ownership x Tax rate
The yearly percentage of value’s increase and the tax rate are fixed by the Town Halls. They are established locally as:
Marbella: Yearly percentage of value’s increase: 2,4% Tax rate: 30%
Benahavís: Yearly percentage of value’s increase: 2,3% Tax rate: 20%
Up to now, when a Town Hall had updated the catastral values, usually with really high increases of the values compared to the existing ones, article 107.3 of the Law had established that on the following five years after the revision of the values, the Town Halls had to apply a deduction of 40 to 60 % to the catastral value. If a Town Hall had not that deduction established, 60% will be applied. Marbella’s Town Hall was exactly in this situation. However, a new Law passed in 2012 changed that situation allowing the Town Halls to eliminate those deductions. We will see how Marbella reacts to that new option.
Since each particular case is different, it is fully recommended that you check your own numbers with your lawyer.