The Constitutional Tribunal has ruled that local authorities may not charge owners “plusvalia” tax if a property is sold for less than the original purchase price.
Local authorities have been calculating the “plusvalia” tax, payable on all property sales, on the value of the “catastral.”
This is a particularly important ruling for all owners who bought their property during the “housing bubble” when prices were artificially inflated and now face selling their property for substantially less than the purchase price.
The “plusvalia” tax has been an important source of income for local authorities but this ruling means they can only charge “plusvalia” if the property has been sold at a profit: that is a higher price than the original purchase price and not on the value based on the “catastral”.
The plusvalia” tax is also known as the Impuesto sobre el Incremento de Bienes de Naturaleza Urbana (Tax on the Increase in Value of Urban Properties).
