Plusvalía tax in Spain when selling: calculating it and when you don't pay

The plusvalía municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, or IIVTNU: the municipal tax on the increase in urban land value) is the tax the seller pays to the town hall when selling an urban property. Following the Constitutional Court ruling of 2021 and the legislative reform that came after it, the rules have changed and taxpayers have more options.

The two calculation methods since 2021

Objective method: The town hall applies coefficients approved every year to the cadastral value of the land, according to the number of years you have owned the property. They are maximum coefficients (each municipality can use anything up to that maximum). This method gives an estimated figure that may be higher or lower than the actual increase.

Actual method: You can pay tax on the actual gain you have made: the difference between the sale price (the land portion) and the purchase price (the land portion). If this taxable base is lower than the one under the objective method, you can choose the actual method. As a taxpayer, you are entitled to choose whichever method works out better for you.

When you don't pay plusvalía municipal

If you sell at a loss (a sale price lower than the purchase price), there has been no increase in the value of the land and you do not owe plusvalía municipal. You have to prove it with the purchase and sale deeds and make an express application to the town hall. Many taxpayers paid this tax on loss-making sales until the Constitutional Court declared that application unconstitutional.

Who pays the plusvalía municipal

In a sale, the person liable for the tax is the seller by default. However, the contract can stipulate that the buyer pays it (although the town hall can always claim it from the seller if the buyer doesn't pay). With inheritances, the person liable is the heir who receives the property.

See also: IRPF (Spanish personal income tax) on the capital gain when you sell your flat. Analyse the total tax cost before you sell with RadarPro.