Quick answer
The plusvalía municipal is a local tax on the increase in value of the land under a property, paid to the town hall when it is sold. In a sale, the seller pays it. If the seller is not resident in Spain, the buyer pays it on the seller's behalf and normally deducts it from the price. If there is no real gain, no tax is due.
What it taxes
Its official name is Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana. It applies to urban land, so it covers apartments, houses and villas in towns and resorts. Each municipality sets its own coefficients and rate within national limits, so the same flat can pay different amounts in Adeje, Arona or Santa Cruz.
Who pays
- In a sale, the seller.
- If the seller is not resident in Spain, the buyer pays it on the seller's behalf. In practice the amount is held back from the price at the notary.
- The contract can say otherwise, but the town hall will still look to the person the law names.
Two ways to calculate it
Since the 2021 reform, the tax can be calculated with two methods, and the seller can choose the lower one:
- Objective method: the cadastral value of the land multiplied by a coefficient that depends on how many years you owned the property.
- Real gain method: based on the actual difference between the sale and purchase prices, applied to the land share of the value.
If you can show there was no gain (you sold for the same or less than you paid), no tax is due. Keep both deeds to prove it.
Deadline
For a sale, the tax is normally declared and paid to the town hall within 30 working days of the deed. Many town halls in Tenerife allow it to be filed online or through the notary.
Each town hall publishes its own ordinance. We can estimate it as part of your valuation; a tax adviser can confirm the exact figure.
Questions owners ask us
Do I pay plusvalía if I sell at a loss?
No. If the sale price is equal to or lower than the purchase price, there is no gain and no tax is due. You need the deeds to prove it.
Is plusvalía the same as capital gains tax?
No. Plusvalía is a local tax on land value paid to the town hall. Capital gains tax on your profit is a separate state tax.
This guide is general information, not legal or tax advice. Rules change; check your own case with a notary, lawyer or tax adviser before you sign.