Capital Gains Tax on land in Spain

1. Who must pay for this tax?

The Capital Gains Tax (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana – Plusvalí­a) is the Spanish municipal tax on the increase in the value of the urban land since the last recorded transfer (sale, inheritance, donation;), not in the building erected upon it.

This tax is borne by the transferor when the property is transferred for a price (e.g. sale of property), but the common practice is that both parties agree the buyer pays it.

Tax upon any gratuitous transfer of property (e.g. donation, inheritance) is payable by the persons to whom the property is transferred.

2. The tax base

The tax base is calculated by applying a rate, which varies on each municipality, to the value of the property at the time of transfer, it also takes consideration on how long has the seller been in possession of the property.

When reinvesting the proceeds of the property sold in another principal residence, you will get relief from this tax up to the amount reinvested.

3. Payment Procedure

The owed portion must be entered in the bank, once you have submitted the corresponding tax form in the Town Council that the property belongs to. You should also submit the sales deed and those documents related to the tax payment.

4. Time-limit for payment

This tax must be paid within 30 days from the signature of the sales deed, or within 6 months in case of inheritance.

5. Getting legal help

Our lawyers provide solid legal advice regarding any tax-related issue in Spain:

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