New way to calculate Plusvalía tax is approved by ministers

For properties that have gone up in value there are two options and the payer can choose the most favourable

ARTURO CERVELLERA

MADRID.

Friday, 12 November 2021, 21:39

The government has moved quickly to come up with a new way of calculating added-land-value tax (plusvalía) after its collection was suspended by a Constitutional Court decision.

The local tax is an important source of income for town halls. There were fears of funding shortfalls unless ministers agreed an alternative way of working out how much should be paid when a property changed hands.

The new rules, which ministers hope will be deemed as within the constitution, are seen as fairer to those whose property has not increased as much in real terms as the supposed value of the land it is on, which was what the tax was originally calculated on.

From now on, if a property changes hands at a loss compared to when it was last sold, no tax is due.

For properties that have gone up in value in real terms there are two options. Either the tax is calculated based on the difference between the old purchase price and the new sales price of a property or, alternatively, the taxpayer can opt to have it calculated against an average of the changes of cadastral value of the land since the property last changed hands.

The payer can choose whichever calculation comes out most favourable for them.

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