Plusvalia Tax – What is it & what does it mean for you?

In February 2017, the Spanish Constitutional Court ruled that ‘Plusvalia’ property tax is no longer charged when a vendor sells a property at a lower value to the original purchase price!

This landmark ruling is linked to the property boom that lasted eight years in Spain. The 2008 bank meltdown saw property prices plummet overnight. Many people resorted to selling their Spanish properties for a lower value than what they purchased it for.

While this is great news for property owners in Spain, local governments are not as happy about this decision. The Plusvalia tax makes up most of local government income, with over €140 million collected in the Malaga province alone!

However, it does mean that property owners are now entitled to claim this taxation back! It is estimated that over 500,000 vendors will be entitled to claim this overpayment back. There is a limited time-frame to get your refund, the property must have sold no later than 2013. The vast majority of house sales since then would have seen a payment of €1000 or more.

Plusvalia tax still being paid today. This means that homeowners selling properties in Spain at a loss today, can claim back the taxation once the property is sold. Spanish law dictates that you must still pay the tax, initially, with the opportunity to claim it back once the sale has been processed.

The process to claim back is quite complex, and people will require the assistance of a law firm to claw back this refund. To appeal the tax successfully a technical report must be commanded to back the legal recourse.

If you have any questions, or think that you may be entitled to a Plusvalia tax refund, you can get in touch with our Spanish team at [email protected] or call us on 01924 675039 for UK callers / 951 247 211 for Spanish residents.

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