Plusvalía tax in Spain
Calculate your plusvalia tax
You’re about to sell or inherit a property in Spain — and then comes the surprise: a local tax you’ve never heard of called the "plusvalía." It doesn’t matter if you made a profit or not — the town hall still wants a piece. sounds unfair? confusing? you’re not alone.
What exactly is the plusvalia tax in Spain? who pays it, how is it calculated, and — most importantly — can you reduce or avoid it legally?
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What is the plusvalia tax in Spain?
The plusvalía tax in Spain, officially called "Impuesto sobre el incremento de valor de los terrenos de naturaleza urbana" (iivi), is a local land value tax. it’s charged by the city council when you sell, inherit, or gift a property. The idea is simple: if the value of the land the property sits on has increased since it was last transferred, you pay tax on that increase.
This tax doesn’t consider improvements to the property — it only looks at how much the land itself has gained value over time.
When do you have to pay the plusvalia tax?
You’re required to pay the plusvalía in Spain in the following situations:
- You sell a property: if the land value has gone up since you bought it.
- You inherit a property: the heirs must pay the tax before taking full ownership.
- You receive a property as a gift: whether it's from a family member or not.
Who pays the plusvalia tax?
This depends on the situation:
- In a sale: usually the seller pays, unless both parties agree otherwise in the contract.
- In an inheritance: the heir pays.
- In a gift: the person receiving the property pays.
This is a municipal tax, so rules and rates can vary slightly depending on the local town hall (ayuntamiento). always check with the specific city where the property is located.
How is the plusvalia tax calculated?
Until recently, the tax was based on fixed formulas that sometimes resulted in people paying even when they sold at a loss. That changed after a 2021 ruling by the Spanish constitutional court, which led to a legal reform. now there are two main ways to calculate it, and you can choose the one that results in the lower payment:
1. Objective method (cadastral value and years of ownership)
This uses the cadastral value (a government-assigned value for tax purposes) and multiplies it by a fixed percentage depending on how long you’ve owned the property.
Example:
- cadastral land value: €40,000
- years owned: 10
- coefficient: 0.09 (set by the local council) taxable base = €40,000 × 0.09 = €3,600
Then, a tax rate is applied (often around 30%) tax owed = €3,600 × 0.30 = €1,080
2. Real gain method
This uses the actual difference between the original purchase price and the sale or transfer value, focusing only on the land portion.
Example:
- land bought at €30,000
- land sold at €45,000 gain = €15,000
- apply a tax rate (varies by city, up to 30%) tax owed = €15,000 × 0.30 = €4,500
You can use the method that gives you the lowest tax bill. Try our free tax calculator or reach out for personalized help.
How to reduce or avoid plusvalia tax legally
Here are a few strategies to lower your tax burden:
Check for property loss
If you sold the property at a loss — meaning you sold it for less than you paid — you don’t have to pay the plusvalía. provide documents (like purchase and sale deeds) proving the loss to your local council.
Use the real gain method
Always compare both calculation methods. especially in cities where the cadastral value is high, using the real market gain might reduce your bill significantly.
Review the cadastral value
If the cadastral value is outdated or too high, you can request a revision from the catastro office. lowering it could help reduce future taxes, including property tax (ibi) and plusvalía.
Inheritance planning
If you're planning your estate, consider gifting the property earlier or setting up a structure that minimizes future taxes for your heirs. consult a tax expert for this.
When and how to pay the plusvalia tax
Once the property is sold, inherited, or gifted, you generally have:
- 30 days (from the date of sale or gift)
- 6 months (from the date of death in inheritance cases; extendable to 1 year)
You must declare the transfer and pay the tax at the local council office or their website if they offer online services.
What happens if you don’t pay?
Late payments can result in:
- interest charges
- fines or penalties
- legal action from the council
Delays can get expensive fast, so act within the legal deadlines.
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Ready to calculate your plusvalia tax?
The plusvalia tax in Spain can catch you off guard, especially if you’re unfamiliar with how Spanish property taxes work. but now, you’re better informed. remember:
- check if the land gained value
- compare both tax calculation methods
- act within the deadline
- ask for help if needed
At Spaintax, we help property owners understand and calculate their taxes clearly and easily. want to know how much you might owe? Contact us for personalized help.
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