PROPERTY SEARCH
Spain will increase Plusvalia tax on selling property next year
Town Halls in Spain will have free rein to raise this tax by as much as 50% from January
The Spanish property market recovered much of it’s pre-Covid vigour this year and several regions reported record sales during the summer. However, interest rates are on the rise and likely to continue in this direction for months to come. As a result, many industry experts are recommending that anyone with the means should buy a house now, as the process is only going to become more expensive.
As for selling property, the government has given home owners another very good reason to pull the trigger as the already pricey Plusvalia tax will be increased substantially from January next year.
Anyone who sells a house in Spain is liable for two taxes: Capital Gains Tax (CGT) and Plusvalia tax, sometimes referred to as municipal capital gains.
The amount of CGT to be paid is set by the government but Plusvalia can be decided by the town halls, who can choose the amount of tax the seller has to pay within a sliding scale supplied by the Spanish government.
Taxes are part and parcel of selling property and most people know enough to factor the expense into the price. The problem is that from January 1, a new budget law means that town halls will have the option of increasing Plusvalia tax by as much as 50%.
Ironically, the Plusvalia was abolished by the Constitutional Court last year but was quickly reintroduced by the government in a slightly different guise so that municipalities could continue to benefit from one of their biggest sources of income.
The Plusvalia is essentially a tax on the increase in value of the land the property sits on during the period of ownership, and must be paid when selling, inheriting or gifting property.
As well as a substantial hike in the cost, from next year vendors who sell a home within 12 months of purchasing it will have to pay the tax – up to now, transactions under a year weren’t taxable.
However, anyone who sells their property at a loss won’t have to pay the tax.
The experts’ advice? If you’re planning to sell a property it’s better to take a small hit and offload it this year than waiting until 2023 and potentially shelling out thousands on Plusvalia tax.
Image: Pixabay
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