Plusvalía municipal when selling property in Spain: what it is and how to calculate it

When selling a property in Spain, there are two separate taxes that fall on the seller, and many foreign owners mix them up. The first is IRNR (Non-Resident Income Tax), which applies to the gain between the purchase price and the sale price. The second is plusvalía municipal, a completely different local tax collected by the town hall, not the national tax authority. In Torrevieja and Orihuela Costa, where we have been working since 1988, we regularly see British, Dutch and other foreign sellers surprised by this second charge that nobody mentioned when they bought.

What plusvalía municipal actually taxes

The official name is Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), or Municipal Land Value Increment Tax. It does not measure how much profit you made on the sale. Instead, it measures the increase in value of the land component of the property during the years you owned it. The building itself is not included, only the land beneath it.

Until October 2021, this created an unfair situation: even sellers who sold at a loss could be charged plusvalía if the cadastral land value had risen on paper. The Spanish Constitutional Court ruled that practice unconstitutional. Since then, sellers can choose the calculation method that gives them the lower bill.

Two calculation methods: choose the one that benefits you

1. Objective method: the cadastral land value is multiplied by a state-set coefficient that depends on how many years you have owned the property. The longer you have owned it, the higher the coefficient, though it caps at 20 years.
2. Real gain method: the difference between the sale price and the purchase price is taken, but only the portion attributable to the land (determined by the proportion that the cadastral land value represents within the total cadastral value). If the land portion of the gain is zero or negative, no tax is owed.

You present whichever calculation produces the lower result. If you sold at a loss and the real gain method produces zero or negative, you should pay nothing, but you will need to document this with the original purchase deed and the sale deed.

Who pays: the seller, in almost all cases

By law, the obligation falls on the seller in a standard property sale. The buyer can be held subsidiarily liable if the seller fails to pay, but in practice this tax is the seller's cost to budget for. The exception is inheritances and gifts, where the recipient (heir or donee) pays the plusvalía, not the person passing on the property.

Deadlines and where to pay

The notary does not handle plusvalía. Nothing is withheld at the notary appointment for this tax. Once the sale deed is signed, the seller has 30 working days to file a self-assessment with the relevant local town hall.

For properties in Torrevieja, that means Torrevieja Town Hall. For Orihuela Costa properties — La Zenia, Playa Flamenca, Cabo Roig, Villamartín, Campoamor — the responsible authority is Orihuela Town Hall and its tax office. For Pilar de la Horadada (including Mil Palmeras and Torre de la Horadada), it is the Pilar de la Horadada Town Hall.

Missing the 30-day window triggers late payment surcharges and interest. For sellers who live abroad, managing this remotely adds a layer of difficulty. We strongly recommend appointing a local gestor before travelling to sign, so they can handle the filing on your behalf.

How much to expect on the Costa Blanca

The amount depends on the cadastral land value, the years of ownership and each municipality's tax rate (capped at 30% by law). For a typical apartment in Torrevieja or Orihuela Costa bought 10 to 15 years ago, the bill usually falls between €500 and €3,000. For a larger villa or a longer ownership period, it can exceed €5,000. It is rarely the biggest cost of a sale, but it catches people off guard if they have not planned for it.

If you sold at a loss or broke even

Since the 2021 reform you can demonstrate that there was no real increase in land value and claim that no tax is owed. You need both the original purchase deed and the sale deed to show the numbers. If the real gain method returns zero or negative, the tax does not apply.

This matters particularly for owners who bought at the 2006-2007 peak and are now selling below what they paid. A quick check with a gestor before the sale can confirm whether plusvalía applies and save a payment that is not legally due.

How we can help

Over more than 35 years selling properties on the Costa Blanca, we have guided thousands of transactions in Torrevieja and Orihuela Costa. We know exactly which costs apply to each municipality, what the deadlines are, and which local gestores handle these filings efficiently. If you are considering selling, we will walk you through every cost before you commit, so there are no surprises at the notary. Get in touch and we will go through the numbers for your specific property.