Plusvalia is the local municipal tax. It is based on an officially assessed increase in the value of the land since the last time the property was sold. This can be quite small if purchasing an apartment, but expensive on a villa with a large plot which has not changed hands for years. Find out the exact amount from the town hall. Do not confuse this tax with the seller’s capital gains tax, which is based on his profit on the sale.
There are two taxes levied, dependant upon the type of property you are purchasing; the property transfer tax is levied on resale properties and is charged at 6% of the new escritura value (purchase price). If you purchase a newly built property from a developer, you will pay a different tax called IVA (VAT) which is charged at 7% of the selling price – plus 0.5 % stamp duty.
| Buyer's responsiblities | Seller's responsibilities |
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(The normal custom is for the seller to pay the Plusvalia. If however the buyer agrees to pay this tax, remember that it is registered against the land and you will have to pay if the vendor fails to do so. This tax is often not demanded until some time after completion).
In the case of a new property, ask the seller to show you the Declaration of new construction (Declaracion de Obra Nueva) together with a copy of the Declaration of alteration of property of an urban nature (Declaracion de Alteracion de Bienes de Naturaleza Urbana), which both demonstrate that the property has been registered for eventual payment of I.B.I.
If you buy a property from a non-resident person or a company, you must withhold 5% of the purchase price. The tax office (hacienda) makes it the buyer’s responsibility that this amount is paid to the tax authority on account of any liability by the vendor for Capital Gains.
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