Talk Quesada forum

When selling a property in Spain, you are liable to two main taxes if you are a resident.
The Capital Gains Tax, the amount you gain on the increase in value of the property, and the Plusvalia Tax, the amount that the land the property stands on is deemed to have increased in value.

The CGT is paid to the government whereas the Plusvalia tax is paid to the municipality.

The Supreme Court of Spain has now ruled that the municipality, or plusvalia, tax is unconstitutional as it is levied differently by the municipalities. Once this has gone through parliament, the plusvalia tax will no longer be charged. One of the sticking points was that the municipality would charge the tax irrespective of whether the land had increased in value or not by the use of some pretty dodgy maths calculations.

This ruling is not retrospective so, if you have had to pay plusvalia in the past, you can't claim it back.

Of course, it sounds like good news but I'm pretty sure that the whole country will get together and come up with some formula for a different tax which is acceptable to the Supreme Court as the money they get from this tax is quite an important part of the town income.

Thank u, that was such an eye opening information! Didn't know it was under disbute...

If you are not a resident, what if any are the taxes to pay and when please? Thanks

CGT on selling a house in Spain, does this apply if you are a Spanish tax paying resident and over 65 years old

Non resident will pay a 3% retention tax on the sale of the property. Any taxes owing for CGT will be taken from that. CGT is 19% for EU citizens and 24% for non EU citizens. This rises in increments depending on the profit up to 23% for EU citizens on gains of over €50,000 and, for non-residents, the flat rate.

If you are over 65 years of age and your Spanish home has been your main residence (ie resident) for more than 3 years then CGT is not payable.

There are various allowances which can be claimed to calculate the true cost for CGT purposes such as legal fees, notary fees, agent fees, VAT or ITP etc. All this should be calculated by your solicitor on selling. The 3% retention fee for non residents is taken at the point of sale.

Thank you for your prompt reply

These politicians can move fast when they want to.

The way plusvalia was calculated was deemed unconstitutional by the court. A new, municipal capital gains tax has been proposed. The Ministry of Finance wants this to be voted on by the council of deputies this coming Monday. This new tax has already been allowable in the constitution by the Constitutional Court. It's only 13 days since plusvalia was said to be against the rules.

It also says that any of the demands that have recently been made can be pursued by the towns to recoup monies they have lost but that the person responsible for paying the tax will not have to do so until the law is passed.

The unconstitutional part was that the tax was supposed to be on the increase in value of the land but town halls were applying the tax on a percentage basis even if there was no gain. The new tax will be reigned in to be charged only when there is an actual gain in the land price.

Now, the legal language was getting a bit flowery but it can mean one of two things. Those who have completed the sale of their property since the ruling and the passing into law will not have to pay it or, which I seem to think more likely, is that those who have recently completed will be chased up for this new tax once the new law is put into place but only if there has been an actual rise in the value of the land.

Saying that, it's pretty clear that anyone, previously, who had to pay plusvalia when there was no rise in the value will not be able to claim it back if the matter has been settled. (The phrase was with force of res judicata which (I think) means that once paid it is final.)

Whichever, at least in future the capital gains on the land will be fair and not just a way of the town halls getting extra money.

Oh blimey that sounds confusing!

Chrisdee wrote:Oh blimey that sounds confusing!

Not really. In the past, if the property you sold had risen in price then you paid Capital Gains Tax on the increase. This is what normally happens and the government gets that.

However, the price of the land may not have risen but the town halls were applying a percentage of the CGT as the plusvalia despite there being no increase in land prices so they were basing the tax charged on the increase of the price of the property, not the land. That's what was deemed unconstitutional.

This new ruling means that the plusvalia can still be charged but only on the increase in the price of the land. If there is no increase, then there is no tax to pay unlike before.

At the moment, there is no plusvalia tax due to the court ruling which is why they want to bring in a new law as quickly as possible.

Sorry couldn't be more clear but "Debido a extremos externos" doesn't even make sense to me in English as Due to outside extremes. "Entre fallos judiciales" could be between judicial reasons (eg since it was declared illegal and a new law being passed) or it could be a lack of judgements meaning no law currently in operation.

I only reads the stuff, you know, not saying that I understands it cos I is thick.

al final, todo se arreglará - or how we say in English, it'll all come out in the wash.

Thank you for taking the time to explain x