# Plus Valia



## Miss Jones11 (Jul 13, 2020)

I am totally confused. I have just sold my house at a huge loss because of the dramatic reduction in property values since the financial crash of 2008. Now I am told I must pay Plus Valia tax because land prices in Spain have increased dramatically since 2008. I paid €400,000 for my property in 2007, that included the land and the bricks, I have now sold at €200,000 and that includes the land and bricks. It is an inland villa. Is this fair and correct?


----------



## Barriej (Jul 23, 2012)

Miss Jones11 said:


> I am totally confused. I have just sold my house at a huge loss because of the dramatic reduction in property values since the financial crash of 2008. Now I am told I must pay Plus Valia tax because land prices in Spain have increased dramatically since 2008. I paid €400,000 for my property in 2007, that included the land and the bricks, I have now sold at €200,000 and that includes the land and bricks. It is an inland villa. Is this fair and correct?


Unfortunately I think its correct. 
We purchased a flat 18 months ago and i paid tax because the price I paid was less than the cadastral value, not fair but there you go. It was built in 2005 and hasn't been revalued since

Didn't realise the seller had to pay though, I was under the impression that the buyer paid due to the 'benefit' gained.

So what you are saying is you paid a capital loss tax (thats a new one) What did your solicitor have to say about it?

Could be wrong and usually I am....


----------



## Lynn R (Feb 21, 2014)

The Spanish Supreme Court did rule at one time that vendors who had sold property at a loss should not have to pay the plus valia, but there was an appeal against it and in 2019 that decision was overturned, unfortunately for you.

https://www.spanishsolutions.net/blog/taxes-in-spain/plusvalia-town-hall-tax-blow/

A friend who sold a property in 2018 she had inherited for less than her brother had originally paid for it did have to pay the plus valia after the original Supreme Court decision, and at that time the Ayuntamientos were saying that people had to pay and reclaim the tax later. She did have a gestor put in a claim for a refund on her behalf, but never got anywhere and obviously she won't now.

To add insult to injury she had already had to pay plus valia on top of inheritance tax when she first inherited the property.


----------



## Lynn R (Feb 21, 2014)

Barriej said:


> Unfortunately I think its correct.
> We purchased a flat 18 months ago and i paid tax because the price I paid was less than the cadastral value, not fair but there you go. It was built in 2005 and hasn't been revalued since
> 
> Didn't realise the seller had to pay though, I was under the impression that the buyer paid due to the 'benefit' gained.
> ...


What you paid was ITP, the transfer tax on property purchases. That's payable to the Agencia Tributaria. The plus valia is a local tax, payable to the Ayuntamiento. It has to be paid by the vendor, within 30 days of the sale being completed at the notary. If the vendor is not resident in Spain, the buyer's lawyer will normally insist on a retention so that they can pay the plus valia on their client's behalf, otherwise if the vendor leaves the country without paying the buyer eventually gets stuck with the bill. If a property is resold less than a year after it was purchased, there is no plus valia to be paid. Otherwise, the longer you have owned the property, the higher the plus valia bill is likely to be. Unlike with Capital Gains Tax, there is no exemption for over 65s selling their principal residence. A lot of Ayuntamientos will have an online calculator on their website so that anyone thinking of selling can see what their liability would be - mine does. From memory, I just had to enter the purchase date of the property, a (hypothetical) date of sale and the valor catastral del suelo from the most recent IBI bill.


----------



## Miss Jones11 (Jul 13, 2020)

Lynn R said:


> What you paid was ITP, the transfer tax on property purchases. That's payable to the Agencia Tributaria. The plus valia is a local tax, payable to the Ayuntamiento. It has to be paid by the vendor, within 30 days of the sale being completed at the notary. If the vendor is not resident in Spain, the buyer's lawyer will normally insist on a retention so that they can pay the plus valia on their client's behalf, otherwise if the vendor leaves the country without paying the buyer eventually gets stuck with the bill. If a property is resold less than a year after it was purchased, there is no plus valia to be paid. Otherwise, the longer you have owned the property, the higher the plus valia bill is likely to be. Unlike with Capital Gains Tax, there is no exemption for over 65s selling their principal residence. A lot of Ayuntamientos will have an online calculator on their website so that anyone thinking of selling can see what their liability would be - mine does. From memory, I just had to enter the purchase date of the property, a (hypothetical) date of sale and the valor catastral del suelo from the most recent IBI bill.


What liability, just because some website makes up fictitious figures based on nonsense land valuations?

No it is Plus Valia tax. I am the seller not the buyer. How can I sell at a €200,000 massive loss, half I paid for the land and bricks in 2007 because of the property market crash and land prices in Spain have doubled since the crash in 2008. Who is responsible for valuing (making up) land prices and how have they got to these values when the whole property market (bricks and land) has collapsed. Is this extortion. Is it a case of lay down dead and say nothing? How can anyone have respect for the Spanish government and authorities when they thieve from people who are already suffering huge financial losses?


----------



## Lynn R (Feb 21, 2014)

Miss Jones11 said:


> What liability, just because some website makes up fictitious figures based on nonsense land valuations?
> 
> No it is Plus Valia tax. I am the seller not the buyer. How can I sell at a €200,000 massive loss, half I paid for the land and bricks in 2007 because of the property market crash and land prices in Spain have doubled since the crash in 2008. Who is responsible for valuing (making up) land prices and how have they got to these values when the whole property market (bricks and land) has collapsed. Is this extortion. Is it a case of lay down dead and say nothing? How can anyone have respect for the Spanish government and authorities when they thieve from people who are already suffering huge financial losses?


I know you are the seller not the buyer, I explained in my reply to Barriej that the plus valia local tax has to be paid by the seller. I am not defending the system, I'm just trying to explain what it is and what the legal position is for people who, unfortunately, have had to sell their property at a loss - ie, that it was challenged in the Supreme Court, the local authorities appealed against the Supreme Court's original decision, and again unfortunately, they won the appeal. 

The valor catastral on which the plus valia is based isn't some fictitious website, as you describe it. It's the equivalent of the old "rateable value" of property in the UK before Council Tax was introduced. It's set by a Government Department called the Catastro, revaluation exercises are carried out every few years by their employees for each separate municipality and its based on a very complex set of criteria including the size of the plot of land the property is built on but lots of other things as well. That value, plus a co-efficient number set by each municipality, is used to establish the catastral value on which IBI bills, the official value of a property for inheritance tax, and the official value for plus valia are based.

Your great misfortune, and I am genuinely sorry for the position you find yourself in, is to have bought at the very top of the market in 2007, after which there was a particularly severe crash in the property market in Spain. The catastral values often don't keep pace with changes in actual market values. Sometimes that can work in people's favour when property market values are at their highest, but not in your circumstances.

You could ask your lawyer about the possibility of appealing against the plus valia bill, as you have sold at a loss. But as I explained earlier, the Ayuntamientos generally insist on the bill being paid first, then an appeal for a refund being lodged. That will incur further legal expenses for you, and you should ask your lawyer whether they think there is a genuine possibility of the appeal succeeding. Although if they just want to make more money, they'll not want to dissuade you from putting in an appeal, it doesn't matter to them whether it succeeds or not as they get paid either way.


----------



## Miss Jones11 (Jul 13, 2020)

Yes all very complicated. As you say _‘’bought at the top of the market in 2007 then a severe property market crash’’_ but at the same time land prices have significantly increased in this market crash.

Does anyone on the forum really believe and agree that land values have dramatically increased during the property market crash, or could they have also gone down in value by 50% like some inland properties.

Is the whole thing an unspeakable scam, but criticism of Spain is not allowed on the forum? In China and Nigeria I would expect it, but where are the EU authorities looking whilst EU citizens are being scammed.

If this happened in France or the UK citizens would riot.

I did mention an appeal to my lawyer; he immediately took my purse out of my bag and had my credit card in his machine, I refused to give the PIN.


----------



## Lynn R (Feb 21, 2014)

Miss Jones11 said:


> Y
> 
> Is the whole thing an unspeakable scam, but criticism of Spain is not allowed on the forum?


Who has attempted to stop you? All I have done is to try to give information about what the plus valia tax is, how it's calculated (which you asked about) and what the current legal position is regarding people being required to pay it when they have sold at a loss.

People could pat you on the back and say oh yes, it's terrible, shouldn't be allowed, all you like but that wouldn't change the factual situation.


----------



## Overandout (Nov 10, 2012)

Catastral values in Spain have risen in almost all areas since 2008 as the continuous revision of them does not stop just because of a recession.

You will have noted maybe that although there was a huge market crash in 2008, the inflation figures for the 12 year period since then are still positive. You need to see catastral values as a similar progression.

The plus-valia taxation system was in place when you purchased your property so it doesn't really look as if Spain has treated you unfairly, rather that you didn't really understand what the effect of your transactions would be.

In the UK (as you seem intent on comparing) you don't pay tax on purchasing a 2nd hand car, here you do. It's the way it is, the law of the land if you like.

I know you have just come on here to vent steam, but really there is little you can do about it, particularly if you expect a legal challenge against the system to be free!


----------



## Miss Jones11 (Jul 13, 2020)

Overandout said:


> Catastral values in Spain have risen in almost all areas since 2008 as the continuous revision of them does not stop just because of a recession.
> 
> You will have noted maybe that although there was a huge market crash in 2008, the inflation figures for the 12 year period since then are still positive. You need to see catastral values as a similar progression.
> 
> ...


Thank you Overandout

If all you say is true and accurate I will go back to my buyer and ask for €500,000 and not €200,000. I will throw in my car and pay the tax.

Perhaps a subject that I was always going to be a loser on, easy to make comments when it’s not your money. If it was your money you would be going barmy.


----------



## Lynn R (Feb 21, 2014)

Miss Jones11 said:


> Thank you Overandout
> 
> If all you say is true and accurate I will go back to my buyer and ask for €500,000 and not €200,000. I will throw in my car and pay the tax.
> 
> Perhaps a subject that I was always going to be a loser on, easy to make comments when it’s not your money. If it was your money you would be going barmy.


I bought my old house in Spain in 2003 and sold it in 2017. I didn't make any profit on it, didn't recoup the cost of the transfer tax originally paid nor the cost of improvements made to it. I still had to pay the plus valia, though, and you will search in vain for any posts by me "going barmy" about it.


----------



## Alcalaina (Aug 6, 2010)

Swings and roundabouts. If you want to compare Spain with the UK, think of all the savings you made on council tax over the years - it's considerably lower in Spain, ours is less per year than we paid per month in England.


----------



## Overandout (Nov 10, 2012)

Miss Jones11 said:


> Thank you Overandout
> 
> If all you say is true and accurate I will go back to my buyer and ask for €500,000 and not €200,000. I will throw in my car and pay the tax.
> 
> Perhaps a subject that I was always going to be a loser on, easy to make comments when it’s not your money. *If it was your money you would be going barmy*.


I do have a property which I purchased in 2007. It is worth approx. 50% of what I paid for it, but I made an informed decision to not sell it due to the economic impacts it would have on my personal finances.

Instead I rent it out at a loss and make up the cost of ownership from my own professional income.

I am losing money due to the crash, I am trapped in a situation I would rather not be in, but there is a difference between the way I am dealing with it and the way you have. 

I am comfortable with my decision (for now) and I hope that one day you will be comfortable with yours.


----------



## Miss Jones11 (Jul 13, 2020)

Overandout said:


> I do have a property which I purchased in 2007. It is worth approx. 50% of what I paid for it, but I made an informed decision to not sell it due to the economic impacts it would have on my personal finances.
> 
> Instead I rent it out at a loss and make up the cost of ownership from my own professional income.
> 
> ...


I fully accept the loss on the sale; I am just one of many in this position due to the financial collapse of the Spanish property market. What I object to are parasite government scammers wanting to extort further money from me with a made up cock a hoop land inflation scheme.

There can only be two opinions here.

1.	I think land values dived in the financial property crash, and current valuations are just fictitious for tax purposes.

2.	You and others think the financial property crash did not affect land prices and land values in Spain have boomed way beyond 2007 values, because the government and it’s websites say so.


----------



## Love Karma (Oct 10, 2018)

As far as I can see you have not said which area you are in, as in some areas the plus valia is heavily discounted and you end up only paying 5% of the total bill. I recently inherited a house valued at 400k as sole beneficiary and had to pay the plus valia on 1/2 share from 2009 -2020 and a full share from 1998-2020 during the Inheritance process and after discounts the 2 combined amounts were approx 90€. So it is area dependant, check wether your local municipality has this scheme.


----------



## Megsmum (Sep 9, 2012)

Miss Jones11 said:


> Thank you Overandout
> 
> If all you say is true and accurate I will go back to my buyer and ask for €500,000 and not €200,000. I will throw in my car and pay the tax.
> 
> Perhaps a subject that I was always going to be a loser on, easy to make comments when it’s not your money. If it was your money you would be going barmy.


No it’s not our money, yes I get your angry, yep it’s a bit of a stupid law, but it’s the law, from a conveyancing view point. There is no need to get snippy because you don’t like the answers. People are simply relaying their individual knowLedge of the situation.

Yes it’s a lot of money to lose, we bought low and had a letter asking for taxes on what the hacienda seemed the property was worth. We contested and won.


----------



## Pesky Wesky (May 10, 2009)

My advice?
Don't bite the hand that feeds you.
You asked for information and people are giving it to you. 

Free.
Whether the information you have been given is to your liking or not is neither here nor there. It would be nice, but not obligatory, to receive some thanks, not complaints.


----------



## Lynn R (Feb 21, 2014)

Love Karma said:


> As far as I can see you have not said which area you are in, as in some areas the plus valia is heavily discounted and you end up only paying 5% of the total bill. I recently inherited a house valued at 400k as sole beneficiary and had to pay the plus valia on 1/2 share from 2009 -2020 and a full share from 1998-2020 during the Inheritance process and after discounts the 2 combined amounts were approx 90€. So it is area dependant, check wether your local municipality has this scheme.


Those discounts apply when the property is inherited, not when the owner sells it.

https://focuslegal.es/bonificacion-en-las-plusvalias-por-herencia/


----------



## Love Karma (Oct 10, 2018)

Lynn R said:


> Those discounts apply when the property is inherited, not when the owner sells it.
> 
> https://focuslegal.es/bonificacion-en-las-plusvalias-por-herencia/


Ah OK, just assumed it was for all and didn't question it as I'd budgeted several thousand + and was most pleased with 90€.....but I think it is still only certain municipalites even in this situation.


----------



## Lynn R (Feb 21, 2014)

Love Karma said:


> Ah OK, just assumed it was for all and didn't question it as I'd budgeted several thousand + and was most pleased with 90€.....but I think it is still only certain municipalites even in this situation.


Yes, that's right it is only certain ones, as explained in the link I posted.


----------



## Love Karma (Oct 10, 2018)

Lynn R said:


> Yes, that's right it is only certain ones, as explained in the link I posted.


I'll consider it as a slice of good fortune that the property was in a municipality with such a scheme.


----------



## 95995 (May 16, 2010)

It is not a scam at all, it is perfectly legal and effectively how the Ayuntamiento makes up for low fees charged each year, thus allowing them to pay for services and infrastructure that they provide. You could think of it as deferred Council tax. Of course, when you are unaware it does come as a major financial and psychological shock when you are hit with a huge bill - that doesn't make it a scam, though.


----------



## Miss Jones11 (Jul 13, 2020)

I have just been told this morning that Plus Valia tax is all irrelevant according to my Spanish Lawyer. Because Spain and the United Kingdom have a double taxation treaty I can claim back all Plus Valia tax paid in Spain through the DHSS in the UK using form PVT287/13 at Croydon office or online. A bit strange because he wanted me to pay him to make a claim in Spain.


----------

