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Plusvalía municipal: Spain's land-value tax explained
Plusvalía municipal is a tax on the increase in the cadastral land value (not the building) of urban property between purchase and sale. The seller pays it. Since the November 2021 reform, taxpayers can choose between the objective formula and the real-gain method, whichever is lower.
What plusvalía taxes
Plusvalía municipal — formally the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU) — taxes the increase in the cadastral value of the land portion of an urban property between the date the seller acquired it and the date of sale.
Who pays it
The seller pays plusvalía in a standard sale. In a gift, the recipient pays. In an inheritance, the heir pays. Buyers should still understand it because a seller's unpaid plusvalía can sometimes be claimed against the property.
How it's calculated since the 2021 reform
After the November 2021 Constitutional Court ruling and Royal Decree-Law 26/2021, taxpayers can choose between two methods:
- •Objective: cadastral land value × coefficient (set annually by central government, varies by holding period) × municipal tax rate
- •Real gain: actual land-value gain (sale price − purchase price, apportioned to land) × municipal tax rate
When no plusvalía is due
If the sale results in no land-value gain (real loss), no plusvalía is payable. The seller must be able to prove the loss with the original deed of acquisition and the current sale deed.
Practical impact on buyers
On a normal arms-length resale the buyer is not liable for plusvalía. But check the arras and final escritura confirm seller responsibility, and ensure your lawyer obtains the municipal payment certificate before completion.
Frequently asked questions
Who pays plusvalía in Spain?
The seller pays plusvalía in a standard sale. In a gift it falls on the recipient; in an inheritance, on the heir. A buyer in a normal resale is not liable.
How is plusvalía calculated after the 2021 reform?
Taxpayers choose between two methods: the objective method (cadastral land value × annual coefficient × municipal rate) or the real-gain method (actual land-value gain × municipal rate). You pay whichever produces the lower bill.
Is plusvalía payable if I sell at a loss?
No. Since the November 2021 reform, no plusvalía is due if there is no real land-value gain. You must prove the loss with the original and current deeds.