Practical Guide: Municipal Capital Gains Tax in Altea – Everything You Need to Know When Selling

Thinking of selling your house in Altea? Then there's something important you need to know: the municipal capital gains tax. This tax is key when you sell a property and can significantly affect your final profits.

People often just call it "plusvalía", but its official name is Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU) – Tax on the Increase in Value of Urban Land. For Spanish town halls, it represents more than €2.5 billion annually. The good news is that Altea used to have a tax rate of 8%, considerably lower than nearby towns like Benidorm (30%) or Calpe (29%), although it has recently increased to 27%.

Many property owners ask me: "And how much is this tax going to cost me?" Well, it depends on two main things: the cadastral value of the land and how long you've owned the property. Since 2017, thanks to several rulings by the Constitutional Court, there are new rules, especially if you sell at a loss.

What exactly is this tax and when do you have to pay it?

The municipal capital gains tax is a tax you pay on the increase in value that the land (note: only the land, not the building) has experienced from when you bought it until you sell it. Each town hall has its own rules and percentages.

When do I have to pay?

You pay this tax when:

• You sell or exchange a property
• You donate a property
• Your land is expropriated
• You give the property as payment for a debt
• You inherit or receive a legacy
• You establish or transfer rights such as usufruct

Did you know? This tax only applies to the value of the land, not to what's built on it. If you sell an apartment, for example, you only pay for the proportional share of the land it occupies.

Are there differences between selling, inheriting, or donating?

Absolutely!

If you sell, you, as the seller, are the one who pays. Unless you don't live in Spain, in which case the buyer will have to pay it for you.

If you donate a property, the person who receives it (the donee) is the one who pays. They have 30 days to do so.

In the case of inheritances, the heirs are the ones who pay. They have six months from the date of death, although they can request an additional six-month extension.

What if I give my house back to the bank because I can't pay the mortgage?

Good news: since 2014, if you surrender your main residence as dación en pago (payment in kind), you don't have to pay this tax. But be aware, these conditions must be met:

1. It must be your primary residence (you must have been registered there for at least two years)
2. Neither you nor your family can have other assets to pay off the debt
3. The mortgage must be with a bank or professional lender

This exemption also applies if your mortgage is foreclosed judicially or notarially.

Who pays the capital gains tax in Altea?

It's important to be clear about who pays before carrying out any real estate transaction.

The seller or the buyer?

The general rule is clear: in sales, the seller pays. And this is the case even if you have agreed otherwise in the private contract. The Altea Town Hall will always claim from the person legally obligated to pay.

As I mentioned earlier, Altea has increased its tax rate from 8% to 27% to cover municipal expenses. It is now at the same level as L'Alfàs (27%), although still lower than Benidorm (30%) or Calpe (29%).

What about special cases?

If the seller does not live in Spain, the buyer becomes the "substitute taxpayer". That's why many buyers ask the foreign seller to leave the capital gains tax money deposited when signing the deeds, to avoid surprises.

In inheritances, the heirs pay. And be careful with this: if you inherit and then sell, you will pay the capital gains tax twice, once as an heir and once as a seller.

Are there any exemptions?

Yes, in Altea you won't pay capital gains tax in these cases:

• Contributions to a joint marital property regime and divisions between spouses
• Establishment or transfer of easements
• Transfers between spouses or to children due to divorces or separations
• If the party liable to pay is the State, Autonomous Communities, or Local Entities
• Charitable institutions
• The Spanish Red Cross

And as I already told you, since 2014, those who lose their main residence due to dación en pago or mortgage foreclosure also do not pay.

How is the capital gains tax calculated in Altea?

To calculate how much you are going to pay, you need to know some key data. Since the 2021 reform, you can choose between two calculation methods and opt for the one that results in the lower amount.

The cadastral value and the coefficients

The first thing you need is the cadastral value of the land. You can find it on your IBI (property tax) receipt, on the Cadastre website, or by asking at the Altea Town Hall.

These coefficients are applied to this value based on how long you have owned the property:

• Up to 5 years: 1.50% per year
• More than 5 to 10 years: 1.40% per year
• More than 10 to 15 years: 1.35% per year
• More than 15 to 20 years: 1.30% per year

The current tax rate

As I mentioned, Altea has increased from 8% to 27%, putting it on par with L'Alfàs but still below Benidorm and Calpe.

An example with real numbers

Imagine you have a house in Altea with a cadastral value of €150,000 and you bought it 10 years ago. We calculate:

• Revaluation: 1.40% × 10 years = 14%
• Taxable base: €150,000 × 14% = €21,000
• What you pay: €21,000 × 27% = €5,670

What is the difference between the objective and the real calculation?

The objective method multiplies the cadastral value by coefficients based on the number of years you have owned the property. The direct estimation method looks at the actual difference between what you paid and what you sold it for, applying the percentage only to the land value.

The advantage you now have is that you can choose the method that results in the lower tax. And if you haven't made any profit (you've sold at a loss), you don't have to pay.

Can I claim if I sold at a loss?

Following several court rulings, you can now recover this tax if you sold for less than you paid.

What the courts say

Constitutional Court Ruling 59/2017 was a turning point: it declared that capital gains tax cannot be levied if there was no real increase in value. The Supreme Court confirmed this in its ruling 1163/2018. And in February 2024, the Supreme Court stated that refunds can even be claimed for final settlements, considering them null and void when the sale was made at a loss.

How do I claim from the Town Hall?

First: submit a request for undue payment refund to the Altea Town Hall with:

• The purchase and sale deeds proving that you lost money
• Proof that you paid the tax
• A formal request with your bank account details for the refund

The Town Hall has six months to respond. If it doesn't, it is understood that they have said no (negative silence).

What if they say no?

If the Town Hall rejects your request or doesn't respond, you have one month to file a reconsideration appeal (recurso de reposición). If this is also denied, you can go to court with a contentious-administrative appeal (recurso contencioso-administrativo) within two months.

Is it worth hiring a lawyer?

Although you can take the first steps yourself, I recommend a lawyer specializing in tax matters because:

• Most town halls do not refund the money willingly
• The deadlines are very strict
• In court, you definitely need a lawyer and a court representative (procurador)
• With a well-prepared claim, the courts usually rule in your favor

In conclusion: What you should remember about capital gains tax in Altea

Capital gains tax is an important factor when selling a property in Altea. The increase in the tax rate from 8% to 27% significantly affects what you will take home. Recent court rulings have greatly changed the rules of the game, especially if you sell at a loss.

You can now choose between two calculation methods, so I recommend doing both before paying to see which one is more favorable for you. Remember that who pays varies depending on the case: usually the seller in sales, with exceptions such as sales by foreigners.

If you sold at a loss, don't give up and claim the refund. The process is not complicated if you follow the steps: request, possible appeal, and, if necessary, going to court. Having professional help increases your chances of recovering the money.

Before selling your house in Altea, do your calculations and take this tax into account. It will save you unpleasant surprises and allow you to make better decisions. Capital gains tax may seem confusing, but once you understand how it works and know your rights, it is much easier to manage.