August 24, 2005 at 3:31 pm #51219
Can anyone confirm what Plus Valia tax is please ? I am told it is a tax on the increase in value of the land my off plan property is being built on, we paid a 30% deposit in 2003 and are due to complete at the end of this year, it states in my contract that I will need to pay it on completion, however I have since been told that this is an illegal practice and the developer is responsible for this tax ❓ We are using the estate agents in house lawyers (based in Benalmadena)
Andy & Maralyn
August 24, 2005 at 4:21 pm #58702
This is a tax paid to the local authority and is calculated by their tax department based on a certain value and the amount of time the seller has owned the property. Normally it is paid by the seller (since they get the benefit) but if in the purchase contract the buyer agrees to pay it then that is freely permitted. It is similar to Capital Gains tax here in the UK but not 100% the same. If ever you come to sell your property in the future you would be liable for the newly calculated Plus Valia unless the buyer agrees to pay it.
Your lawyer should have advised you on this before you signed anything.
August 24, 2005 at 8:16 pm #58706
The cost of plus valia can be obtained from the local municipal tax office. The Agent selling the properties should theoretically be able to provide an estimate at least of how much the tax will be on individual properties being sold. I have been unable to date to obtain substantive information via the Agent selling my property which is on a fairly large development. Up to now no figure has not been “revealed”.
A hot topic to keep an eye on also is the charging of a mortgage cancellation fee. My property was originally bought by an investor who signed a contract with the developer agreeing to pay a mortgage cancellation fee if a mortgage was not taken up.
The investor is selling on before completion having paid only a deposit. My lawyer has advised that passing on this charge within our private purchase contract is not legal. However, I have agreed to pay it as the developer has stated he will not sign over the title deeds without the payment. I intend to reclaim this amount via my legal team after completion on my purchase.
Ever the optimist!
August 30, 2005 at 3:18 pm #58716
Dear Andy and Maralyn,
Basicly the opinions given to you in this forum are right and well explained, as a lawyer I can confirm you that the “plus valia” ( as it is known popularly ) is a sort of capital gains BUT payable to the Town Hall.
The figure depends on the time the seller has hold the property
( although the first year it is not charged ) and there is a limit of 20 years, it also depends on the square metres of land the property is occupying.
The Law says clearly that it is a seller’s tax ( obviously ) and in my opinion it is legal to agree in private contract that the tax will be paid by the buyer. The Courts have ruled that some articles and clausules included in the contracts with developers as NULE ( therefore not legal even if included in a contract) and abusive, as far as I know the agreement with a developer regarding the “plus valia” has not been declared nule yet.
You should also know that when the seller is a non resident in Spain , the Council can claim the plus valia to the buyer, therefore is a normal practice for a buyer to retain enough money from the price to pay that tax.
Finally let me tell you that is a big mistake to use the lawyers recommended by the agency , not to mention the inhouse lawyers ! the conflict of interests is tremendous.
Good luck, regards.
Jose Maria Sánchez Alfonso
Lawyer / Abogado
Málaga, Costa del Sol
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