What is “PLUSVALIA” and how much do you need to pay?
On 21 December 2016 when everyone was getting ready for Xmas and the El Gordo Lottery, the Supreme Court of Andalucia surprised the Spanish legal world! A company had purchased some land for 14.2 million euros and had been ordered to pay the sum of 185.025 euros in plusvalia even though the land had been sold at a loss for just 3,5 milion euros. The company were successful in their legal proceedings at First Instance and then at the Supreme Court of Andalucia. Therefore we have an important precedent case that states if you sell a property and you have made a loss, you do not have to pay plusvalia. Plusvalia is in effect a local tax charged by the town hall on the gain made by the seller.
Property owners are obliged to pay plusvalia when they sell a property and even heirs have to pay plusvalia when they inherit a property. Up until now if a request for the calculation of the plusvalia was not made, then a property could not be registered in the names of the new owners or heirs. The ruling will affect the income of local authorities across the country but at the moment, until there is a firm decision or ruling from the either the Ministry of Justice or the Supreme Court of Spain, clients must tread carefully when it comes to the plusvalia.
So if you are selling or inheriting a property, what course of action should you take? If you are a non-resident then the buyer will insist on retaining the plusvalia and this is reasonable because if you are leaving Spain you could leave the new owner with a future plusvalia bill as the owner of the property would acquire the debt. However it is important that the monies are only retained and that the plusvalia is not paid until there are further decisions on the matter and/or the Town Hall takes action for payment. If a Spanish tax resident sells, then they will take on the responsibility of payment of the plusvalia.
If you have sold a property in the last four years and paid plusvalia when in fact you had made a loss, then you can seek a rebate of the plusvalia from the Town Hall. The My Lawyer in Spain team are taking action against Town Halls to recover plusvalia paid in the past where the amount of the plusvalia paid, considerably exceeds reasonable legal costs.
As a first step to see if it is worth claiming your plusvalia, we require sight of the escritura of purchase, the escritura of sale and proof of the plusvalia paid. If you would like us to review your possible plusvalia rebate claim at no cost to you, send us the listed documents by email to firstname.lastname@example.org or call us on +34 951 203 094 or on 0845 508 2395 if calling from the UK for a confidential discussion. Visit our website www.mylawyerinspain.com for more information about us.