What’s the Plusvalia tax in Spain?

Written by Juan Madridejos Velasco and Luis Alberto Álvarez Moreno, Notaries in Barcelona and partners at J&LA Notarios Asociados.

Familiar with the term plusvalia tax Spain? Probably not, unless you’re from Spain or have interacted with the language in-depth. Plusvalía tax, also known as land value tax, is often paid by the seller and is applied to the rise in value of urban land that occurs when an asset is transferred, traded, inherited, or acquired following a donation.

Considering its name yields additional hints. Plus, (which denotes additional or more), and valía (in Spanish denotes value). Therefore, this tax is based on the increased value of the property’s land. It does not affect the value of the property but the value of the land on which it sits. The seller (the person who transfers their property) or property owner usually pays this tax, and they do so at the time the property is transferred.

Plusvalía on Spanish properties

So, what is the plusvalia tax on Spanish property? The tax, together with capital gains tax are the two taxes that sellers in Spain must pay once they sell a property. The Plusvalia, designed to tax a rise in value throughout the course of ownership but exclusively on the value of land, is conceptually comparable to capital gains tax. A municipal (local) tax known as the plusvalia is levied by the town hall when a property is sold.

It is determined by taking into account the property’s rateable or market worth as well as the time since the last time it changed ownership. The goal is to tax the rise in the value of land upon which property is situated, some of which is attributable to local government and community-wide improvements to the area.

How much is it; you must multiply the yearly rise in land value shown on the receipt by the town hall’s established rate, which takes into consideration the number of years you have owned the property. In some instances, land depreciates in value and in so doing, you can avoid having to pay this tax if you can show that the market hasn’t increased over the time you’ve had the property or that you suffered a loss when you sold the property.

How Notaries help selling a property and dealing with Plusvalía tax

Notaries are administrative authorities who are crucial to the legal process and who must be present at significant life events, such the purchase or sale of real estate. It may sound as though it’s just a fancy name for lawyers but there is a difference. The major distinction between a lawyer and a Notary is that the former deals with private papers like contracts and may represent a client, for instance in court. Contrarily, a Notary is a public servant and a guarantee that a contract is legal. In Spain, real state contracts need to be authorized by a Notary to produce all the legal effects, and only public documents can access to the Land Registry.

For more information, you can read our article on Notarios in Spain:

JLA Notarios: Notaries in Barcelona.

If you have any doubt about Real estate contracts and taxes or if you are looking for Notaries in Barcelona: feel free to contact us! JLA Notarios have studied the law in-depth and carry credible knowledge to assist you in such matters so you can go on about your daily life carefree.

Notario will ensure that all documents are signed properly, including those required by banks, mortgage companies and Public Treasury. Hiring a Notario the next time you want to purchase a property is a small price to pay for the security of your assets.

Our office is located in the centre of Barcelona and our team speaks English. Feel free to contact us through the contact form, by emailphone or whatsapp!

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