Plus Valia Tax

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This topic contains 13 replies, has 8 voices, and was last updated by Profile photo of Anonymous Anonymous 3 years, 9 months ago.

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  • #55547
    Profile photo of Anonymous
    Anonymous
    Participant

    Searched the SPI forums for an answer to this question, nothing found, so hopefully someone can put me right.

    After selling a Spanish property my Spanish abogada retained monies a year ago to pay IBI and plus valia tax.

    I’ve been told recently that the IBI has been paid, as has the plus valia bill for the land, but not the house. Still awaiting the bill for that.

    I’d always thought Plus Valia (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana) was a tax based solely on the increased value of the land upon selling, but not the house, which is covered by CGT.

    Am I missing something very obvious here? Thanks.

  • #97984
    Profile photo of Anonymous
    Anonymous
    Participant

    How much money was retained? I would not have done what you had done. A receipe for larger bills in my opinion.

    Plus Valia is just based on the value of the land. You would imagine with land prices falling there would be nothing to pay!!!

    For my sale I simply paid one Plus Valia bill. How it was calculated I have no idea, but it was 3 times the value on buying 2 years earlier and in a falling market!! (300 Euros as opposed to around 75 Euros paid by the builder when I completed in 2007 and the builder must have owned the land for a lot longer than I did)

    GCT is sometimes referred to a Plus Valia as the literal translation is value increase. I guess the size of the retention will gives us some idea on what the abogado was retaining!!

  • #98109
    Profile photo of Anonymous
    Anonymous
    Participant

    @jp1 wrote:

    GCT is sometimes referred to a Plus Valia as the literal translation is value increase.

    Thanks very much for replying jp1. Rather not divulge the figures you ask for!

    Seems you may have a point though according to this link anyway…

    http://www.euroresidentes.com/Property/plusvalia.htm

    If correct, it says ‘local authorities’ DETERMINE the amount of CGT to pay on profit made, so that obviously doesn’t mean the fixed, blanket 18% CGT from Hacienda?

    Therefore, is everybody hit with TWO CGT bills on sale of house? Someone must know shirley?

    <<>>>

  • #98111
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Iano

    The CGT is currently chargeable at 19% to non residents who sell their property. The figure to be paid is calculated from a comparison between the price that you originally paid for your property – and the price that you are selling it for now. Only the profit made is subject to the CGT payment. Plus valia is purely the cost of any increase in the current land value between your original purchase and your current sale. CGT and Plus valia are separate taxes.

    It is possible to reduce the profit margin declared before applying the 19% CGT rate. If you want any more information – please PM me.

  • #98127
    Profile photo of Anonymous
    Anonymous
    Participant

    @OliverB wrote:

    CGT and Plus valia are separate taxes.

    Many thanks Oliver.

    From that then I can assume ‘plus valia’ is not a term that would generally be used by a fluent English-speaking abogado when referring to CGT.

    Rather than clog the forum up further with any more detail in this case, I’ll take up your offer and PM. Thanks.

  • #98133
    Profile photo of Anonymous
    Anonymous
    Participant

    Iano,

    Having read your post again, hopefully here is a clearer explanation, which is essentially what has been said but may clear a few things up.

    As you know there are 2 taxes to pay on selling property/ land

    Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana ( Called simply Plusvalia in English circles)
    Impuesto sobre la plusvalia ( Called simply GCT in English circles),

    So yes your fluent English speaking abagado may well call CGT plusvalia. In fact I think my lawyer also used the full term to me when I sold.

    Secondly are you getting confused or have been described a simple version of actually what happens when you sell a property as a non-resident.

    Legally only one retention is made and that is 3% of the sale price. This is a retention to cover monies owed under “Impuesto sobre la plusvalia” to Hacienda. This retention is made by the buyer, NOT the Abagado, and the buyer is responsible for paying it to Hacienda. If you believe that there is no CGT owing or an amount less than the 3% retention then you need to actively request this refund by filing form 214 to Hacienda. It can take over a year to receive the refund.

    Has you Abagodo simply described the above process as him/her withholding some monies (including an extra amount for IBI and Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana) to cover these bills. If so then this is not technically correct as the buyer withheld 3% of sale price and your Abagado withheld the rest.

    You will not receive a bill for CGT on the sale of the property from Hacienda and the above process describes why not!

    So getting back to sums involved here, and I appreciate that you don’t want to post details and of course that is not necessary as you can work the figures out yourself. But if you know 3% of the sale price has been withheld seperately and in addition to this your Abagodo has withheld another sizeable sum (you know roughly what the correct value for IBI is and Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana is relatively small if you have only owned for a few years) then if the figures don’t seem to agree then ask some question!

    I am sure you have read the posts on here about 3% retention and claiming it back. Your Abogado is being lose with works if he simply means the refund of Impuesto sobre la plusvalia has not been received but in English says to you the bill has not been received.

  • #98137
    Profile photo of Anonymous
    Anonymous
    Participant

    JP,

    Appreciate you taking the time to respond more fully.

    I perhaps should have been a little clearer in the OP. There was no 3% retention in my case because I was resident and had been a Spanish tax payer up to the time of sale, had the relevant fiscal documentation and Hacienda authorisation forms to prove it etc. There was no official requirement at Notary for anyone to retain an amount of money from the sale proceeds.

    Because I returned to the UK immediately pre-sale, the abogado was given ‘poder’ (power of attorney) to act for me at Notary, and retained a not insignificant sum of money from the sale proceeds in order to pay outstanding IBI and the Plus Valia for the land value increase. Both taxes have now been paid, according to him. He originally told me that once these bills had been paid, the outstanding balance from retained monies would be returned to me.

    He has now told me the outstanding balance is not being returned to me because he is awaiting the Plus Valia tax bill for the HOUSE, and has even told me he is pursuing the authorities, in order to speed things up! This was some two months ago.

    Thing is, and this is important, because I was a tax-paying resident at the time of sale of, what was, my primary residence, I now have two years in which to reinvest the capital gains in Spain, before I am liable for CGT. The abogado is fully aware of this. He also knows it is my intention to reinvest in Spain should the economy show signs of picking up within the next two years, and if I did, there would be absolutely no CGT to pay at all. By the way, the amount of money he’s retained would not be sufficient to pay the CGT bill in two years time anyway!

    Hence my confusion as to what he means exactly by ‘Plus Valia’ tax for the HOUSE, and the justification for keeping hold of my money!

    I appreciate this is probably as complicated to understand as it is for me to type coherently! 😀

  • #98138
    Profile photo of katy
    katy
    Spectator

    We were resident (no retention). The Plus Valia…a few thousand euro, had to be paid upfront at the notary for which we received a receipt. We did not use a Lawyer.

  • #115880
    Profile photo of The Australian
    The Australian
    Participant

    Hello

    I am interested in buying a new property in Spain.

    Could please anyone tell me the number of taxes and % that I will have to pay when I buy it and then each year?

    Does this Plus Valia Tax apply to new apartments?

    Thank you

  • #115884
    Profile photo of Anonymous
    Anonymous
    Participant

    A quick answer and not to do with taxes or your question but…. rent!!!

    After you’ve spent a summer and a winter somewhere in Spain you’ll have a better idea of whether buying is a good idea or not.

    Don’t end up with a shiny new apartment in a block full of squatters and an empty swimming pool because no one is paying the community fees!

  • #115885
    Profile photo of katy
    katy
    Spectator

    Plus valia should be paid by the seller although some try to pass it on to the buyer if they are a bit naive.

  • #115886
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    Plus valia is a tax paid by the seller to the local townhall. In the case of a non-resident seller, it is always recommend that buyer withholds the amount and pay it themselves. If its not paid, it becomes a debt on the property.

  • #115887
    Profile photo of katy
    katy
    Spectator

    I seem to remember having to hand the money over to the Notary 😕 We were resident but perhaps we had the look of someone about to skip the country…which we did a couple of hours later 😆

  • #115899
    Profile photo of Anonymous
    Anonymous
    Participant

    When I worked in Spain we made a provision for this in the contract and withheld the “plus valia” from the seller until everything was done. We didn’t have a bad reputation though but a lot of times the sellers could become a little cranky because of this. One even tried to bribe me to hand it over since he was going to do a runner.

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