What is municipal capital gains tax (Plusvalía) in Spain?

Plusvalía, formally IIVTNU, is a municipal tax on the increase in the value of urban land when property ownership changes. It is regulated by the Local Finance Law and administered by each municipality.

Who must pay the Plusvalía tax?

Typically the seller pays in a standard sale. The buyer can be liable if the seller is a non-resident, and in inheritances or donations under Spanish tax law.

How is the Plusvalía tax calculated?

Start from the cadastral land value and apply the municipal annual revaluation rate for the years of ownership to determine the taxable increase. The tax cannot exceed 30% of the calculated gain.

What exemptions apply to Plusvalía?

Common exemptions include reinvestment in a principal residence, sale by owners aged 65 or over (if all owners qualify), sales at a loss, certain pre-1995 acquisitions, the 2012 incentive window, and specific EU cross-border reinvestment scenarios.

When must Plusvalía be paid?

For sales, payment is due within 30 days of transfer. For inheritances or gifts, the deadline is 6 months, extendable to 12 months without extra cost, subject to municipal procedure.

How did the Constitutional Court ruling affect Plusvalía?

On 27 October 2021, the Constitutional Court held parts of the Local Finance Law unconstitutional. Plusvalía cannot be levied if no real gain occurred, and taxpayers may request eligible refunds for payments made within the last four years.

Everything there is to know about property capital gains tax and inheritance tax in Spain

After purchasing a property in Spain, it’s important to know the associated taxes and obligations, including the tax return and property taxes. One of the key taxes related to real estate transactions is the capital gains tax.

Understanding the Spanish tax system, including capital gains tax and inheritance tax in Spain, can be challenging for foreigners. To help, we’ve compiled everything you need to know about these taxes in this article.

Municipal capital gains or Plusvalía

Capital gains tax in Spain, officially known as Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU – Tax on the Increase in the Value of Urban Land), is a municipal tax applied when a property changes ownership. This tax, part of the Spanish property tax system, is regulated by the Ley Reguladora de las Haciendas Locales and overseen by each local municipality or town hall.

Over time, land may increase in value. When the property is sold, the difference between the original purchase price and the sale price is considered a capital gain, and this gain is subject to taxation under Spanish law. Since it is a municipal tax, rates and rules may vary slightly by municipality.

Who must pay the tax?

Depending on the circumstances, the responsible party differs according to Spanish tax law:

The seller – in a standard property sale, including cases of capital gains on property.
The buyer – if the seller is a non-resident taxpayer, or in cases of inheritance tax or donation.

How much is the tax?

To calculate the tax, start with the cadastral value of the land (valor catastral del terreno), not the building, at the time of acquisition.

Next, contact the local Ayuntamiento (town hall) where the property is located to obtain the applicable annual revaluation rate (coeficiente de revalorización). Multiply this rate by the number of years you’ve owned the property to determine the taxable increase in value.

Although rates vary by municipality, the Plusvalía municipal tax cannot exceed 30% of the calculated gain, following the limits established under Spanish local tax regulations.

You can also estimate your liability using this calculator.

Exceptions

The Spanish capital gains tax (IIVTNU) and related inheritance tax in Spain include several exemptions under national and EU legislation:

Reinvestment in a principal residence (reinversión en vivienda habitual).
Sale of a principal residence by individuals aged 65 or older (only if all owners are over 65).
Sale resulting in a loss (i.e., sale price is lower than purchase price).
Property acquired before 1 January 1995 and sold for less than €400,000.
Property purchased between May and December 2012—eligible for a 50% exemption due to market conditions at the time.
EU residents reinvesting sale proceeds in a new principal residence, even if located outside Spain, in accordance with EU tax regulations on cross-border reinvestment.

Note: The bullet about non-residents and 19%/24% rates refers to income tax on capital gains (Impuesto sobre la Renta de no Residentes), not the municipal Plusvalía tax, and has been omitted here for accuracy.

How to pay the tax?

The payment process varies by municipality. Contact your local Ayuntamiento to confirm the procedure and available payment methods. In most cases, this must be done through the local tax authority responsible for Impuesto sobre el Incremento del Valor de los Terrenos.

When to pay?

Deadlines depend on the type of transfer, as established by Spanish municipal law:

Sale: Payment must be made within 30 days of the property transfer (non-extendable).
Inheritance or gift: Deadline is 6 months, extendable to 12 months at no extra cost, similar to inheritance tax deadlines in Spain.

Good news regarding inheritance and Plusvalía

As of 27 October 2021, the Constitutional Court of Spain (Tribunal Constitucional) ruled that key provisions of the Ley Reguladora de las Haciendas Locales (Local Finance Law) were unconstitutional.

Previously, the Plusvalía tax was calculated using a formula based solely on the cadastral value and years of ownership—regardless of whether the property actually increased in value.

The Court found this method did not reflect real economic gain and therefore declared it invalid. As a result:

The Plusvalía municipal tax can no longer be levied if no actual capital gain occurred.
Taxpayers may request a refund for payments made within the last 4 years through their local tax authority.

This ruling by the Spanish Constitutional Court has significantly reduced the cost of transferring real estate in Spain, offering tax savings that previously could reach €6,000 or more in some cases.

Need help?

Determining whether you owe Plusvalía municipal, understanding inheritance tax obligations for non-residents, or claiming a capital gains refund can be complex. Our team at Delaguía y Luzón—specialists in property law, tax law, and inheritance law in Spain—provides expert guidance to ensure full compliance with Spanish and EU tax legislation.

Tax Law, Uncategorised