Winkworth International Property Specialists in Spain

It should probably go without saying that those who sell or buy apartments in Sotogrande, Estepona, Marbella or another part of the Costa del Sol will want to be well-versed in the relevant tax situation before they make their move.

Such individuals are likely to be heartened by the news of the Spanish Constitutional Court’s ruling that homeowners in the Guipúzcoa province of the Basque region should not be required to pay capital gains tax (CGT), which is known as Plusvalía in Spain.

What does this mean for prospective buyers on the Costa del Sol?

The law – officially called the tax on the Increased Value of Urban Land (IIVTNU) – applies when a homeowner in Spain sells their property for profit and is required to pay a percentage on that margin. However, for several years, town halls have been charging the tax even when there is no profit or for that matter, a loss.

Now, it seems that this practice has been brought to an end by the Constitutional Court. While the court’s ruling specifically concerns the Basque region, it is thought to be only a matter of time before it sets a precedent through jurisprudence that will apply across the country, eventually leading to a national-level amendment to the law.

In the meantime, town halls in such regions as Andalucía are technically allowed to continue charging CGT for property sales resulting in zero profit or a loss. With CGT such a major revenue source for many town halls, it can’t be ruled out that some of them will continue to take this route.

In practice, however, it seems that town halls will soon lose their ability to impose the tax in such circumstances – a big boon for those looking to buy apartments in Sotogrande or elsewhere on the Costa del Sol.

A logical change that is good news for home purchasers across Spain

It is difficult to argue with the logic of the change – after all, as Spanish notary Ramón Blesa has observed: “If there has been no increase in value, this tax is absolutely unjustifiable and incoherent.” Certainly, if one is to judge by the name, capital gains tax should be administered on the basis that if there is no gain, it does not apply.

With many town halls now bracing themselves for retrospective claims – up to 35,000 people in the Málaga province alone are thought to be potentially eligible for refunds – the ruling is likely to benefit all manner of homeowners, home buyers and investors across Spain, including the Costa del Sol.

Get in touch with Winkworth today for advice on how this development could impact on your own plans to sell or buy apartments in Sotogrande, Marbella, Fuengirola or any of the other sought-after areas of the Costa del Sol.






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