Welcome to Barrington Homes

April 21, 2017

The change to Plusvalia – what does this mean when selling your property?

Filed under: News,Property,Useful Information — Tags: , — Barrington Homes @ 12:34 pm

Spain’s Constitutional court in a landmark ruling on the 16th of February 2017 declared that Plusvalia property tax cannot be charged when a vendor sells property at a loss. This basically means – no profit – no taxation.
I am involved in listing and marketing the properties for our clients and I wanted to try and explain how this will affect our clients in the past, present and future. I hope this helps you gain a little more understanding:-
The Plusvalía is a local (municipal) tax charged by the town hall on properties when they are sold. It is calculated on the rateable value of property and the number of years that have passed since the property was last changed hands. The objective is to tax the increase in the value of the land on which the property stands, some of which is due to improvements to the area carried out by the local government and the community at large.
The base for this tax is the catastral value (valor catastral) which is found on your IBI statement you receive around August time. The amount due in tax will depend on how long you have owned the property, so if you have owned it for 2-3 years it will be much lower than if you have owned the property for 10+ years. The maximum amount of years for Plusvalia taxation is 19 years, so anyone owning over that period only need to take into account the first 19 years taxation.
An important point for buyers is to ensure their lawyer arranges for the Plusvalia calculation and withholds those funds before completion for payment within the 30 days or the new owner could be liable. Note for Buyers! This is why is it so important to work with a lawyer when buying a property in Spain.

There are 2 questions to arise from this change:-
I have paid my Plusvalia and made a loss on the sale of my property or no capital gains, can I make a claim?
The answer is yes, but you can only claim for the last 4 years as any tax collected before February 2013 is now time-barred. In other words, any vendor who’s sold a property at a loss since February 2013, and has paid ‘Plusvalia’ tax, can make a request to claim. This is great news and we highly recommend you contact your lawyer or come in and have a chat with Juan Mateo, our independent lawyer. The first stage is to issue a letter to the town hall at a cost of 70 Euros plus IVA and if this is accepted, then the lawyer can draw up a proper claim. For further information, please contact Juan on:- info@mateo-abogados.com
If I want to sell my property now and I am making a loss or no profit, will I have to pay Plusvalia?
Looking at different information coming out, I believe that in principle under Spanish Law, you will have to pay upfront, and then claim back. I do not think you can refuse to make a payment, but if you are working with a lawyer, you should be able claim back a full refund. As with other property taxation issues, such as complimentaria tax and 3% retention – a lawyer to act on your behalf is advisable.

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

« Back to blog