Answers for property owners
Do I Have to Pay the Municipal Land-Value Tax If I Sold at a Loss?
The short answer is no. What matters is knowing how to prove it and meeting the deadlines, because an assessment that is not appealed in time becomes final.
SHORT ANSWER
The municipal land-value tax (plusvalía municipal) taxes the increase in the value of the land. If the sale price is lower than the purchase price, there is no increase and it does not have to be paid. You prove it with the purchase and sale deeds or with an expert report. If you have already paid it, you can ask for a refund; if the town hall assesses you, you have one month to appeal.
IN THIS ARTICLE
This article was prepared by David Mencía, a lawyer specialising in civil, property and tax law, and it answers a very common question: what to do about the plusvalía when you sell for less than you bought for.
What the municipal land-value tax is
The Tax on the Increase in Value of Urban Land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana), known as the plusvalía municipal, taxes the profit that results from transferring a property, whether by sale, inheritance or gift. In general, it is paid by the seller, the heir or the recipient of the gift.
What the courts say
Since 2017, the Constitutional Court and the Supreme Court have handed down several rulings in favour of taxpayers: situations in which there is no increase in the value of the property, or no gain has arisen on the transfer, cannot be taxed. As a result, the taxpayer can ask the town hall to refund what was paid, or notify it that there has been no increase and that, therefore, the tax should not be assessed.
How to prove there is no increase
It can be proved by any means, although the most advisable route is to use the public documents of acquisition and transfer of the property, or an expert report.
How to claim, depending on who assessed the tax
The taxpayer assessed it
You can file a written request with the town hall asking for a refund of what was wrongly paid. The deadline is four years from the filing of the self-assessment.
The town hall assessed it
This is the usual case in most Costa del Sol town halls. The taxpayer can appeal within the month after receiving the assessment, if they did not first file a written notice that there was no gain.
If you do not appeal within the legal deadline, the decisions become final and cannot be reviewed. Respect the deadlines.
2026 update: since November 2021, the law itself provides that a transfer with no increase in value is not taxed, and it allows the tax to be calculated by the method most favourable to the taxpayer. We cover this in what taxes you pay when selling.
Frequently asked questions
Do I have to declare the sale if there is no plusvalía?
Yes: it is advisable to notify the town hall that there has been no increase and to prove it with the deeds, so that they do not assess the tax.
What deadline do I have if the town hall has sent me the assessment?
One month from receiving it to appeal. After that, it becomes final.
And if I have already paid it?
If you self-assessed it, you can ask for a refund within four years of filing.
Where can I get advice on my specific case?
From a lawyer or tax adviser. Each case depends on the dates, the values and the town hall.
Every case is different: before you sign or decide, confirm your situation with your own lawyer, notary or tax adviser.
Sources: David Mencía, lawyer; Constitutional Court and Supreme Court; consolidated text of the Local Taxation Law (Ley Reguladora de las Haciendas Locales). Last updated: 24 October 2026.
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