The Spanish Supreme Court has confirmed that it is possible to claim a refund of the municipal capital gains tax (plusvalía) when there has been no increase in the value of the land, even if the tax has already been paid. This applies to the sale of all types of urban properties, such as houses, flats, and land.

What is the municipal capital gains tax?

The municipal capital gains tax is levied when you sell an urban property, and it is calculated based on the theoretical increase in the value of the land from the time you acquired it until you sell it. However, in many cases, property owners do not see a real profit when selling their property but are still required to pay this tax.

What has the Supreme Court said?

The Supreme Court has made it clear that taxpayers are entitled to claim a refund of the capital gains tax when there has been no actual increase in the value of the land. This means that even if the tax has already been paid, if you can demonstrate that the land’s value has not increased since you purchased it, you may be able to recover the money.

Who does this ruling affect?

This court ruling applies not only to land sales but also to any type of urban property. If you have sold a house, flat, or any other property in a city or urbanised area and did not make a profit from the increase in the land’s value, you can request a refund of the tax.

Steps to claim a refund:

1. Review the purchase and sale value of your property: Compare the price at which you bought the property with the price at which you sold it. If there is no real increase, you may be eligible to claim.
2. Consult with a tax advisor or lawyer: They can help you determine whether you meet the criteria for a refund and guide you through the process of preparing your claim.
3. Gather the necessary documentation: It's essential to have all the paperwork proving that there was no increase in the land’s value. This includes the purchase contract, the sale contract, and any property valuations you may have had done.
4. Submit your claim to your local council: Even if you have already paid the tax, you can begin the process of recovering the payment by submitting the proper documents and arguments.

A relief for property owners

This ruling provides significant relief for those who have sold a property during a time when land prices have not risen. The possibility of recovering the money paid in capital gains tax offers a fair solution for those who have not made a real profit.

More information: https://www.poderjudicial.es/search/openDocument/925f4ac7054b033ea0a8778d75e36f0d