Faq
Tax
- What is the tax on the Increase of Value of Urban Terrain (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, plusvalía)?
The Tax on the Increase of Value of Urban Terrain (plusvalía) is a direct tax that attempts to participate in the capital gain generated by urbanising actions carried out by public entities. Specifically, it has a real and object character and taxes the increase in value found to exist in urban terrain (never for the value of the construction), and becomes evident whenever it changes hands (through sale, inheritance, donation, etc.) either the property itself or any rights over the same. It is a tax exclusively for the local municipal council and they are entirely responsible for its ordinance and management. .
The way of calculating the tax is to take the value of the property when the tax is being generated and apply a fixed percentage which will depend on each municipal council. In general terms, the value of the property will be the same as stated in the last Property Tax bill reflecting the value of the property. The percentage applied to the value is the result of multiplying the rate of taxation established by the local municipality by the number of completed years, without fractions, that the property has been in the hands of the seller, up to a maximum of 20 years.
The period for presenting this tax is 30 working days if they are acts ‘intervivos’ (purchase, donation...) or 6 months, extendible to 1 year if so desired, when it is an act ‘mortis causa’. The parties can negotiate over who should pay this tax, but these negotiations do not affect the public administration so, if the tax suffers a lack of payment, it will be demanded from the party responsible for its payment.
If it is a free transmission without charges, the responsibility will fall on the new owner, if this is not the case, the responsibility will fall on the seller. In the case of a sale, the taxpayer responsible may be substituted, in this case, if the person responsible is a non-resident in Spain and does not pay the tax, the local administration may address itself to the purchaser for the full payment.
In order to make a correct estimate of this tax it is necessary to know the following: - The part of the property value that applies to the land (within your IBI bill you can see the total value, and how it is broken down between the value of the land and that of the construction).
- E- And the rates that have been established by each municipality. If these are no to hand, at least we can know the maximum rates, with which we can calculate what would be the maximum bill to be paid (if they later charge less, all the better). The tax can be up to 30% of an amount calculated according to the following maximum rate (the local municipality may charge an inferior rate):
Increase of the maximum value by year of antiquity
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ANTIGUITY OF UP TO (YEARS)
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5 10 15 20
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3,7% 3,5% 3,2% 3%
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If the antiquity is more than 20 years, the maximum applicable is 20 years. For example: if a flat is sold that was bought 6 years and 3 months before, with a land value estimated at 20,000 euros, the calculation would be the following:
- Step 1. As the antiquity is for 6 years, the second column in our chart is applicable, i.e, 3.5%.
- Step 2. the percentage is multiplied by the number of years of antiquity (3.5% x 6 = 21%). This is the 'increase in value' that has affected the property.
-- Step 3. This percentage is now applied to the value of the land: 20,000 x 21% = 4,200. This now becomes the base for the tax.
- Step 4. The base is multiplied by the maximum tax level that municipalities are permitted to use (30%): the result will be the maximum final quota to be paid (1,260 euros).
The way of calculating the tax is to take the value of the property when the tax is being generated and apply a fixed percentage which will depend on each municipal council. In general terms, the value of the property will be the same as stated in the last Property Tax bill reflecting the value of the property. The percentage applied to the value is the result of multiplying the rate of taxation established by the local municipality by the number of completed years, without fractions, that the property has been in the hands of the seller, up to a maximum of 20 years.
The period for presenting this tax is 30 working days if they are acts ‘intervivos’ (purchase, donation...) or 6 months, extendible to 1 year if so desired, when it is an act ‘mortis causa’. The parties can negotiate over who should pay this tax, but these negotiations do not affect the public administration so, if the tax suffers a lack of payment, it will be demanded from the party responsible for its payment.
If it is a free transmission without charges, the responsibility will fall on the new owner, if this is not the case, the responsibility will fall on the seller. In the case of a sale, the taxpayer responsible may be substituted, in this case, if the person responsible is a non-resident in Spain and does not pay the tax, the local administration may address itself to the purchaser for the full payment.
In order to make a correct estimate of this tax it is necessary to know the following: - The part of the property value that applies to the land (within your IBI bill you can see the total value, and how it is broken down between the value of the land and that of the construction).
- E- And the rates that have been established by each municipality. If these are no to hand, at least we can know the maximum rates, with which we can calculate what would be the maximum bill to be paid (if they later charge less, all the better). The tax can be up to 30% of an amount calculated according to the following maximum rate (the local municipality may charge an inferior rate):
Increase of the maximum value by year of antiquity
--------------------------------------------------
ANTIGUITY OF UP TO (YEARS)
--------------------------------------------------
5 10 15 20
--------------------------------------------------
3,7% 3,5% 3,2% 3%
--------------------------------------------------
If the antiquity is more than 20 years, the maximum applicable is 20 years. For example: if a flat is sold that was bought 6 years and 3 months before, with a land value estimated at 20,000 euros, the calculation would be the following:
- Step 1. As the antiquity is for 6 years, the second column in our chart is applicable, i.e, 3.5%.
- Step 2. the percentage is multiplied by the number of years of antiquity (3.5% x 6 = 21%). This is the 'increase in value' that has affected the property.
-- Step 3. This percentage is now applied to the value of the land: 20,000 x 21% = 4,200. This now becomes the base for the tax.
- Step 4. The base is multiplied by the maximum tax level that municipalities are permitted to use (30%): the result will be the maximum final quota to be paid (1,260 euros).
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