Town Halls to repay taxes to property sellers

Filed under : Conveyancing & Property Law, Tax Planning - Inheritance

A decision of the Malaga administrative courts may have set a precedent for thousands of vendors in Andalucia who sold their properties for less than the purchase price. The local Town Hall tax – plusvalía – has been charged on all property sales, inheritances and donations for many years. In some cases the tax has been tens of thousands. This is despite the fact that the property owner may have made a loss on the sale particularly on properties bought in the property boom and sold after the crash in 2008.

This court ruling mirrors other regional court decisions in Madrid, Catalonia, Valencia and Rioja. The reasoning of the Judge is that the plusvalía whose full title is – Impuesto sobre el Incremento del valor de los terrenos de naturaleza urbana – is implicitly a tax on an increase in value. Since the beginning of the crisis many people have sold at a loss so a tax referring to “an increase in value” is inherently unjustifiable. The decision on the sale of a property in Fuengirola cannot be appealed to a higher court as the amount of the claim is less than 30.000€. Interest will also be payable on the amount to be repaid by the Town Hall. Although Spanish courts are not automatically bound by precedent from a lower court this decision may help thousands of vendors to reclaim this tax.

An immediate claim should be made by submission to the Town Hall which is not costly but stops your claim being time barred. However if the Town hall does not respond it may be necessary to make a claim through the courts. If you have paid this tax on a sale at a loss you may be able to make a claim for the return of monies paid. You will need copies of the deeds and evidence the tax has been paid. For more information please call us on 952 527014 or contact us on [email protected] We have tax and property experts who can advise you on your particular case.