The municipalities were forced to do this after the Constitutional Court ruled the previous calculation unconstitutional, thereby preventing them from collecting the tax. 

The taxpayer will now be able to choose the method to determine the tax base which will benefit them the most.

There are two options to choose from: 

• Use the real profit from the sale
• Apply a formula based on coefficients applied to the cadastral value of the land

The following examples are from the Ministry of Finance.

Example 1

A home was bought in 2017 for 310,000 euros.
It is then sold in 2021 for 350,000 euros.

Real taxable base:
The total gain from the sale is 40,000 euros (remember, only the value increase of the land is taxable).
The total cadastral value is 100,000 euros, with 60,000 euros being the cadastral value of the land, 60%.
Therefore the real value increase of the land is 60% of the gain of the sale, 40,000 euros, which is 24,000 euros. 

Objective method:
The cadastral value of the land (60,000 euros) would be multiplied by 0.17 (coefficient for an operation with 4 years between purchase and sale).
60,000 x 0.17 = 10,200 euros.

In this example, it would be more beneficial for the taxpayer to choose the taxable base from the objective method of 10,200 euros, instead of the real taxable base of 24,000, to which the Plusvalía municipal tax rate, chosen by the local town hall, though by law cannot exceed 30%, is applied. 

The maximum amount due will be 30% of 10,200 = 3,060 euros.

Example 2

A home was bought in 2014 for 250,000 euros.
It is then sold in 2021 for 260,000 euros.

Real taxable base:
The total gain from the sale is 10,000 euros.
On the date of the sale the total cadastral value is 100,000 euros, of which 20,000 euros corresponds to the value of the land - 20%.
The real gain in the value of the land will be 20% of 10,000 euros = 2,000 euros. 

Objective method:
The cadastral value of the land (20,000 euros) would be multiplied by 0.12 (coefficient for an operation with 7 years between purchase and sale).
20,000 x 0.12 = 2,400 euros.

With example 2, the taxpayer would benefit from choosing the real taxable base of 2,000 euros, instead of the objective method base of 2,400 euros.

The maximum amount of tax due will be 30% of 2,000 = 600 euros.

The treasury will offer the taxpayer the two options for Plusvalía municipal and the taxpayer can choose the best option for them. Either the real value of the land gained between the purchase and sale value or the objective method, using new coefficients set by the ministry.

Additionally, the municipalities also have the option to lower the value of the land by up to 15%, reducing the contribution base of the tax.

Also, as previous rulings have made clear, if there is no profit or gain in value of the land, then no tax is due.

Having two options and the choice to choose which option will benefit you the most is a great improvement on the previous system.

Despite the above, navigating the taxes around a property purchase can still be a minefield and that's where we and our professional legal partners step in and make it easy for you. Mediterranean Homes is the Inland Property Specialists with over 30 years of combined experience, covering Alhaurin El Grande, Alozaina, Coín, Guaro, Mijas, Monda and Tolox and anywhere else in and around the Guadalhorce Valley. 

If you have a house to sell, we can guarantee to sell it for you at the right price. Simply fill in our contact form or call us on (+34) 951 242 157 to make sure you get the best price for your property and the right legal advice to optimise your taxes.