Municipal Capital Gains Tax in Spain 2025: a complete guide for luxury homeowners and investors

Buying or selling a high-end property in Spain —whether it’s a villa in Jávea, an estate in Altea, a penthouse in Alicante city or a seafront home in Ibiza— requires considering fiscal aspects that can decisively influence the transaction. One of the most important is the municipal capital gains tax (“plusvalía municipal”), a levy that directly impacts profitability and whose rules have changed in recent years.

What is the municipal capital gains tax?

The municipal capital gains tax (IIVTNU) is a local tax on the increase in the value of urban land when a property is transferred (sale, inheritance or donation). It is collected by the town hall where the property is located (e.g. Alicante city, Elche, Benidorm, Dénia, Jávea, Altea, Torrevieja…).

The tax is calculated on the cadastral value of the land, not on the total sale price of the home. Therefore, knowing this value is essential.

When is it paid?

• Sales and donations: within 30 working days of completion.
• Inheritances: within 6 months of the owner’s death (extendable by a further 6 months if requested on time).

If you can prove that you sold at a loss (no real capital gain), the tax is not due.

Who pays it?

• Sales: the seller.
• Donations: the recipient.
• Inheritances: the heirs.

Payment is made to the local town hall where the property is located.

How is it calculated in 2025?

The taxable base can be calculated in two ways. The taxpayer may choose whichever is more favourable:

1. Objective method: Tax base = cadastral land value × coefficient depending on the years of ownership (see 2025 table below). The local tax rate is then applied.
2. Real method: Tax base = (Land sale value − Land purchase value). If this figure is lower than under the objective method, you can use it.

The tax rate is set by each town hall and cannot exceed 30%. Many municipalities in the province of Alicante apply between 20% and 30% (each under their own local rules).

Maximum coefficients 2025 (objective method)

Town halls may apply equal or lower coefficients (these are maximum limits). They may also reduce the cadastral land value by up to 15% depending on its level of update.

How to find your town’s tax rate

Each municipality publishes its IIVTNU Fiscal Ordinance. It details the tax rate, possible allowances (e.g. for direct-line inheritances) and reductions. Practical steps:

1. Search Google for “Ordenanza IIVTNU + [municipality name]” (e.g. “Ordenanza IIVTNU Xàbia”, “Ordenanza plusvalía Altea”).
2. Go to the town hall’s Electronic Office and look under Finance/Taxes → Local ordinances. Select Tax on the Increase in Value of Urban Land.
3. Check the article titled “Tax rate” (usually expressed as a percentage) and review sections on allowances and base reductions.
4. If in doubt, request a written calculation or simulation from the town hall, or ask your fiscal advisor/Luxinmo to handle it for you.

Tip for new-build buyers: in recent developments (Altea Hills, Cumbres del Sol, Sierra Cortina…), the cadastral land value may start relatively low and increase over time. The “taxable event” is the transfer date, so always check the current cadastral value in your IBI council tax bill.

Example: villa in Jávea

Data: villa in Xàbia bought in 2010 for €1,500,000, sold in 2025 for €2,100,000. Total cadastral value €400,000; land portion 60% (= €240,000). Assumed municipal tax rate: 30%.

Objective method

Ownership: 15 years → coefficient 0.10.
Tax base = 240,000 × 0.10 = €24,000.
Tax due = 24,000 × 30% = €7,200.

Real method

Land sale value = 2,100,000 × 60% = €1,260,000.
Land purchase value = 1,500,000 × 60% = €900,000.
Tax base = 1,260,000 − 900,000 = €360,000.
Tax due = 360,000 × 30% = €108,000.

Conclusion: in this case, the objective method is far more advantageous (€7,200 vs. €108,000).

Inheritance and donations in Alicante

• Inheritance: heirs are liable (6 months, extendable). Check your town for allowances by relationship (spouse, children, parents) and possible reductions of cadastral land value.
• Donations: the recipient pays. Some municipalities grant relief for direct-line donations, though not all.

When is the tax not payable?

• Sales at a loss (no real increase in value). You must document it (deeds, costs, etc.).
• Exempt transfers by law (very specific cases) and municipal allowances on inheritances/donations when applicable.

What if I don’t file or pay on time?

The town hall may charge the tax plus penalties/interest for late payment:

• 5% within 3 months.
• 10% between 3–6 months.
• 15% between 6–12 months.
• 20% after 12 months.

If you expect cash-flow issues, apply for deferral or instalments as soon as possible.

Impact on income tax (IRPF)

If you are the seller and pay the municipal capital gains tax, you can deduct that amount when calculating your capital gain for Spanish income tax (IRPF). If, exceptionally, the buyer pays, the amount is added to their acquisition cost, affecting their future tax when they sell.

Frequently asked questions (Costa Blanca focus)

How many years must pass to avoid paying? There is no automatic exemption by years. After 20 years the coefficient does not increase, but the tax is still due if there is a gain.

How much is the tax on €200,000 or €70,000? It is not based on that figure but on the cadastral land value and coefficients, with your municipality’s rate applied. Request a simulation using your latest IBI data.

What if I can’t afford to pay? You can request deferral or instalments. Avoid default to prevent penalties.

Can you sell without paying? It must be declared and settled on time; in practice, it is required for full legal and registry security.

Are over-65s exempt? No general exemption applies. Only the allowances specified in each municipality’s ordinance.

Quick checklist before signing

• Obtain the latest IBI bill and check the land cadastral value and percentage.
• Calculate both objective and real method and choose the most favourable.
• Verify the tax rate and allowances in your town’s IIVTNU ordinance.
• For inheritances/donations, review allowances by relationship and deadlines.
• Prepare the online filing on the town hall’s website (or delegate to your trusted property advisor).

Comprehensive property advisory with Luxinmo

In high-value transactions in the province of Alicante or Ibiza, precise calculation of the municipal capital gains tax can save significant sums. At Luxinmo Real Estate we provide a comparative simulation (objective vs. real), verify the rates and allowances in your municipality and coordinate the filing process so you can buy or sell with complete peace of mind.

Would you like us to run your personalised calculation (IBI, years of ownership, municipality)? Contact us today and we’ll provide clear, tailored advice.