Plusvalia who pays?

Hi,

Can anyone explain "plusvalia" tax to me please?

I understand it is a tax for the seller.   However, my lawyer seems to be suggesting otherwise.   I would just like to be all clued up before firing off the next email :-)

Many thanks for any help.

The Capital Gains Tax (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana - Plusvalía) is the Spanish local tax on the value  increase  of the urban land since the last recorded transfer (sale, inheritance, donation…).

Seller is the party obliged to pay this tax.

I have seen it usual for buyers directly from developers to pay the Plusvalía themselves, however when buying second hand it is usually the seller. So if you are buying a new flat from the developers it would not be strange that the fact that you have to pay the Plusvalía is written in the contract.

Like with many laws, one thing is what the law says but you can agree otherwise and as long as there is mutual consent and it is written and signed, there is no problem. Like for the reserve money, by law you are entitled to have it back double if the seller cancels for no reasonable cause, but you can agree not to. These kind of laws, I think, are there to protect you in case there was nothing actually written or spoken about. Some labour laws are the same.

Hi TP1, welcome.

All of  (re Distinctive's post). The SELLER has made the profit on the sale of the land your property is built on since he bought it, (NOT US) &, by law, HE is liable. Maria wrote that too.

We bought off plan & our SPANISH contract said we agreed to pay all developer's taxes !

However, in the ENGLISH copy which was the one we expected to be a TRUE copy, it omitted this very conveniently & we only knew about it when we were billed for around 1500€ & we queried this charge with our agent. He said it's the Plus Valia tax. We said it wasn't in our contract that we'd agreed to pay it as, if it had been, we'd not have signed. Agent sent us a copy of our Spanish contract with it highlighted & he translated it. We complained about agent's gross misconduct (as we were using their legal dept  who were negligent in so much) & they reluctantly agreed to cough up. You need eyes in the back of your head, you really do. Us Brits are just one great big money pit to some out there.

Truly you need to have twenty eyes, it was very unprofessional, to leave out of the translation something like that.

Thank you for all your help.

I have now had it confirmed that the seller will be paying this :-)

Hi, this is my first post here. I have been viewing the forum for the past couple of weeks and have found it to be very informative.

I have read  that if the seller does not eventually pay this tax the Town Hall can then apply the debt to the buyer.

Does anybody have any experience of this? Can the Town Hall legally do this? Does the buyer have any rights to fight this?

Any advice much appreciated.

Rather the contrary!

Plusvalia payer is always the seller.

Even if the parties ( seller-buyer) agrees on the tax to be paid by the buyer, the Local Council will not have action against this last one ( buyer). Just the seller can ask the amount back from buyer if they have agreed this way and buyer had not paid.

In addition to buying or selling property, the other time you will end up paying Plusvalia is as a form of death duty!

If you own your property, in joint ownership with your spouse/partner, when they die, you will end up paying this capital gains tax on their half of the property when it passes into your hands.

I have heard there is a way round this (forming a PLC and putting the property in the hands of the company, but I have still to investigate this further).

Just to clarify that even though the plusvalia tax (tax on the increased value of urban land) is to be borne by the vendor, the law also provides that when the vendor is a non resident, the tax office can request payment from the purchaser. This is valid since a couple of years as non residents left without paying. Consequently, it is advisable that the purchaser retains these moneys on completion, or he will find himself facing an extra fee he did not foresee. Of course, you can claim back from the vendor, but that's a court process...

My concern would be who sets the value of the land?  In the UK, it seems that whilst the value of our properties have decreased dramatically, the cost of buying a building plot is still rising.  No doubt this exacerbated by the self - build market being increasingly attractive.  If I sell my apartment in Spain, I would expect to get about 1/2 of what it cost me to buy, will the Plusvalia reflect the falling value of my property, or will some jobsworthy suggest that the value of the land has increased, whilst the bricks and moarter have bombed?

My parents who are non resident are selling their flat. The Plusvalia is a joke as it is based on land value set by the town hall in 2004. I did find this 'Frequently Asked Question" at Suma's website...Suma is a public body concerned with tax collection in Alicante...

Q. I have bought a house from a foreigner and I have been asked to pay IIVTNU [Transfer Tax]. I do not agree with this because in transfers for good and valuable consideration it is the vendor who is considered to be the taxpayer.

A. In property purchases and sales, where the seller is a physical person who does not reside in Spain, the buyer is the person who must pay the IIVTNU.

Anybody heard of this for foreigners before?

Thanks
Stephen

Firstly, Plus Valia and transfer tax are two separate and unrelated taxes.

Plus Valia is usually paid by the vendor, and is based on the increase in the valor catastral (land value) between the date of purchase, and the date of sale - a kind of capital gains tax if you like. It is collected by the local town hall. If the current valor catastral was calculated in 2004, it simply means it's not been revised more recently. Unless they have owned the property for many years, this tax is unlikely to be very much. You can find out easily enough by going to your town hall and asking.

Transfer tax, collected by Hacienda, a bit like stamp duty, is almost always paid by the buyer, and I'm not aware that the nationality or residency status of either the seller or the buyer has anything to do with it.

As non-residents, your parents should also be aware that 3% of the sale proceeds will be retained at the notary in lieu of any capital gains tax due.

Selling is relatively simple and straightforawrd, but if they are unfamiliar with the sale process, or do not speak much Spanish, they would probably be well advised to use the services of a lawyer to handle the sale - but it is imperative to get a quote up front, to avoid any nasty surprises later. If your folks are using a reliable, competent estate agent ( !! ), they may handle everything and there may be no need for a lawyer.

Hope this helps.

Thanks for this Roberto.

So IIVTNU and Plusvalia are not the same thing? They appear to be the same thing on Suma's website.

People have advised me that the Plusvalia is usually a few hundred euros but our lawyer has told us it wil be over €4,300. This is based on a very high cadastral value by the town hall. It seems ridiculous that the town hall is not forced to work with current valuations rather than 6 year old valuations:

Cadastral value of the land: 51.497,15 €
Number of years of ownership: 8 years
% of ownership: 100 %
COEFICIENT: 3,5 %
Tax Rate: 30 %

51.497,15 x 8 x 100% = 411.977,20 x 3,5% = 14.419,20 x 30% = 4.325,76 €

 They also advised there is no way of challenging this. Does anyone know any better?
Thanks

Stephen

Apologies, the Q & A in your first post confused me; where it says " IIVTNU [Transfer Tax] " it seemed to be suggesting Plus Valia & transfer tax are the same thing. They are not. IIVTNU, or Impuesto sobre el Incremento del Valor de los Terrenos de Nauraleza Urbana, is indeed Plus Valia.

I had a quick look at the SUMA website, and found this Q & A too:

Q: I have received an order to pay the IIVTNU for a property I sold. The deed makes it perfectly clear that the buyer will be responsible for this. Why am I being asked to pay when I am the seller?

I do feel that the info on their site is a tad confusing, because this one seems to suggest the seller should pay the transfer tax as well, which is certainly not the case! I think perhaps the answer to the question you saw is misleading; normally, the seller would pay the Plus Valia within 30 days of the sale, but if the seller is non-resident, it may be reasonable for the buyer to ask to retain the amount payable, and pay it on behalf of the seller, in case the non-resident skips the country without paying it, in which case the debt would be registered against the property with the buyer therefore becoming liable. As for the calculation you give, I cannot verify it or otherwise, but it doesn't look quite right to me - it's supposed to be worked out on the increase in the land value during the years of ownership; have you used the calculator on the site to check it? If I were you, I would try to get in touch with the relevant SUMA office and ask them direct to give you a figure.

 Sorry I can't be more helpful - maybe one of the Costa Blanca agents who post on here can help.....

A:The order for payment is correct. The taxpayer, in property transfers, or the establishment or transfer of real rights, is always the transferor, regardless of any agreements that the individuals may have reached and even when these are recorded in the deeds.