Capital Gains Tax and Municipal Plusvalía When Selling Property in Alicante
Selling a property in Alicante after several years of ownership triggers two separate taxes that are often confused: the municipal plusvalía and the capital gains withholding (or its equivalent for non-residents). Understanding the difference lets you work out exactly what you’ll take home from the sale.
What the municipal plusvalía is
It’s a local tax on the increase in the land’s value (not the building) between the date you bought and the date you sell. It’s charged by the town hall, and the amount depends on:
- The cadastral value of the land.
- How many years you’ve owned the property.
- The coefficient set by the local town hall, within limits set by national law.
Following recent legal reform, if you can show there was no real increase in the land’s value, you’re entitled to be exempt from this tax — particularly relevant for sales completed when prices have fallen.
What the income-tax withholding is
- If you’re a Spanish tax resident, the capital gain is declared in your annual income tax return, taxed on a progressive scale on the difference between sale price and purchase price (adjusted for costs and taxes tied to the original purchase).
- If you’re a non-resident, the buyer is required to withhold 3% of the sale price and pay it directly to the Spanish tax authorities on account of your tax bill. Afterwards, you file the corresponding return: if the withholding was higher than the actual tax owed, you can claim back the difference.
A simplified example
If you bought a property for €300,000 and sell it ten years later for €400,000, the €100,000 gain (adjusted for deductible costs) is the basis for calculating the relevant tax, while the municipal plusvalía is calculated separately, based on the land’s cadastral value and the years of ownership.
Why you should run the numbers before setting your asking price
Many owners set their asking price without factoring in the real tax impact of the sale, then get caught out at signing. Calculating both taxes in advance lets you negotiate with full information and plan what to do with the proceeds.
Need personalised guidance for your situation?
For more than 60 years, SAGA has guided investors and private buyers through property decisions on the Costa Blanca. Get in touch with our team and we’ll help you work through the tax, legal or financial questions before you take the next step.
