Plusvalía tax. A second capital gain tax?

It is pos­sible that you do know about this tax if you have sold your prop­erty be­fore. If not, this will look like a second cap­ital gains tax. We will show you in this art­icle how it works and ex­plain the pos­sible fu­ture of this tax.

Which is subject on this tax?
The true name of this tax is Im­puesto sobre el In­cre­mento de Valor de los Ter­renos de Nat­uraleza Urb­ana (IIVTNU) or in Eng­lish lit­er­ally, Tax on the In­crease in the Value of Urban Land, bet­ter known for the Span­ish as “Plus­valía”.

This tax is col­lec­ted by the town halls and the con­tro­versy has been after it a lot years. Some tax­pay­ers think this is a second cap­ital gains tax. In fact, on Novem­ber 2021 the Con­sti­tu­tional Court made il­legal the cal­cu­la­tion method. It took one week for the Gov­ern­ment to ap­prove a new brand legal method. Re­cently, one of the parties on the op­pos­i­tion ap­pealed to the Con­sti­tu­tional Court but they said this new method is 100% legal. Su­preme court does­n’t think the same, so this is not the end of the de­bate.

How is the new method?
Let’s see this with an ex­ample. My friend Nic­ola bought a prop­erty in 20/03/2014 for 150.000 € and now she sold it by 180.000 € in 01/12/2022. The cata­stral value is 100.000 € which 35% is to the ground.

The plus­valía is 30.000 €. We see the two op­tions we have:

Objetive method
The value of the ground is 35.000 € x 0,15 = 5.250 €

Tax base is 5.250 € x 30% of the tax rate = 1.575 € to be paid.

The fig­ure 0,15 is ra­tio which use from a table. De­pend­ing on the years, the fig­ures are higher or lower. There is na­tional table but each town hall can vary this.

Real method
Trans­mis­sion value: 180.000 € x 35% = 63.000 €

Pur­chase value: 150.000 € x 35 % = 52.500 €

Plus­valía is 10.500 € x 30% of the tax rate = 3.150 € to be paid

You can choose the most prof­it­able op­tion for you. The ob­ject­ive method in our ex­ample. Don’t for­get that if you chose the real method, you have to provide the deeds which prove the fig­ures.

Last but not least, bear in mind this tax is de­duct­ible on your cap­ital gain tax.

Our pro­fes­sion­als in Span­ish Solu­tions can help you to get the res­ult of this tax.