Since the 2021 reform, the plusvalía municipal has no single formula: it has two, and the taxpayer may apply whichever comes out cheaper. The problem is that the system does not warn you. Many town halls assess under the objective method, the one worked out from the valor catastral (the official cadastral value) alone, and do not compare it with the other. If nobody does the second sum, nobody claims it. This guide is that second sum, explained so that it can be done with the IBI bill (the annual municipal property tax) and the two escrituras, the public deeds of purchase and sale, on the table.
Where the two methods come from
The Tribunal Constitucional, Spain's Constitutional Court, in its judgment 182/2021, declared unconstitutional and void the provisions that set how the tax base was determined, because they laid down a single, objective method of calculation that allowed no evidence to the contrary. Royal Decree-law 26/2021 adapted the Local Government Finance Act to that ruling, and did so by bringing in a system with two ways of calculating and the taxpayer's right to have the one giving the lower base applied.
That is the underlying change: the tax stopped being an automatic sum on the valor catastral and began to allow proof of what the real increase in the land's value was.
The objective method
The base is obtained by multiplying the value of the land at the time the tax falls due by the coefficient that matches the number of years since the acquisition.
| Element | Where it comes from |
|---|---|
| Land value | The valor catastral of the land at the time the tax falls due, shown separately on the IBI bill |
| Coefficient | The one set by the municipal bylaw according to the years elapsed, which may not exceed the legal maximums, updated every year |
| Tax rate | The one set by the town's bylaw, within the maximum the law allows |
And not out of excessive caution. The maximum coefficients are updated by the State Budget Act and each town hall sets its own, and its rate, within the legal maximum, so a table published on a website stops being true the day a bylaw changes. The valid figure is the one in your town's tax bylaw in force on the date the tax fell due, published in the province's official gazette and normally available on the town hall's website. It is the first thing we check in every case, and it is not a figure we ask the client for.
Two details of the objective method worth knowing. First: town halls may reduce, up to a legal limit, the valor catastral of the land when it has been changed as a result of a collective revaluation, and that reduction only applies if the bylaw provides for it. Second: when the land has no valor catastral set at the time the tax falls due, the law allows the town hall to issue the assessment once that value has been set.
The actual-gain method
The base is obtained from the actual increase in the value of the land, calculated like this:
| Step | Operation |
|---|---|
| 1 | Transfer value minus acquisition value, using the values stated in the title deeds |
| 2 | Multiply that difference by the share that the land's valor catastral represents of the total valor catastral |
| 3 | Apply the tax rate in the bylaw |
Step 2 is the one that throws people, and it is the key to the tax: what is taxed is the land, not the building. If on your IBI bill the land accounts for 30 % of the valor catastral, only 30 % of your gain goes into the base. Where that percentage comes from and what to do if it does not add up is in the guide on the land value.
When setting the acquisition and transfer values for this tax, the law requires the ones stated in the title deeds documenting the transfer to be used, without counting the costs or taxes charged on those transactions. In other words: the estate agent's commission, the notary or the transfer tax (ITP), which do go into the income tax calculation of the gain, are not added here. Some argue the opposite by citing rulings from before the reform, and it is an argument that can be raised, but it is not what the text of the law says today, and it is worth knowing that before building on it.
The worked comparison
A flat bought in 2014 for 150,000 euros and sold in 2026 for 185,000. Total valor catastral 70,000, of which 21,000 is the land, that is 30 %. The coefficients and the rate used below are invented for the example: the ones for your case are in your town's bylaw.
| Objective method | Actual-gain method | |
|---|---|---|
| Starting point | Valor catastral of the land: 21,000 | Increase: 185,000 − 150,000 = 35,000 |
| Adjustment | × coefficient for 12 years (example: 0.12) | × land share: 30 % |
| Tax base | 2,520 | 10,500 |
| Rate (example: 25 %) | 630 € | 2,625 € |
| Applied | The objective method: 630 € | |
Now the same flat, but sold for 158,000 instead of 185,000, with everything else unchanged (the coefficient and the rate are still invented for the example):
| Objective method | Actual-gain method | |
|---|---|---|
| Tax base | 2,520 | (158,000 − 150,000) × 30 % = 2,400 |
| Tax at 25 % | 630 € | 600 € |
| Applied | The actual-gain method: 600 € | |
The difference between the two examples is not in the property: it is in how much was made. And from that comes the practical rule that explains why so many municipal assessments could be lower.
When each one wins
| Situation | Usually wins |
|---|---|
| A large gain after many years of ownership | The objective method |
| A small gain or a sale at a loss | The actual-gain method, and if there is no increase, there is no tax |
| Purchase and sale only a few years apart | It depends on the market in those years: both sums have to be done |
| Land valor catastral very high compared with the price paid | The actual-gain method |
| A property with little land in proportion, such as a flat high up in a large block | Usually the actual-gain method |
| An inheritance where the declared value was cautious | They have to be compared: the value declared for Inheritance Tax is the heir's acquisition value |
There is no shortcut: the only way to know is to calculate both. It takes ten minutes with the IBI bill and the two deeds, and it is the part of the work most often skipped.
How the choice is made in practice
It depends on how your town hall collects the tax, and the two ways are not the same:
- If the town requires a self-assessment, you calculate, choose the method and file. The choice is made at that moment, and the deeds have to be provided if the actual-gain method is applied.
- If the town issues an assessment, the town hall sends you the sum already done, almost always under the objective method. The choice is then made by appealing within the period stated in the notice, which is short.
That difference matters more than it seems, because it changes the deadline, the route and the consequences of letting it pass. It is developed in the guide on reclaiming an overpaid plusvalía, which is the natural sequel to this one.
If you would like us to do both sums and file under whichever is lower, it starts with the plusvalía municipal intake form: the two deeds and the latest IBI bill are enough for us. And a warning that comes as standard: a method coming out lower does not mean the town hall will accept it without argument. It is put forward properly, documented and defended, but the result is not guaranteed.
Where to read the bylaw, and what to look for in it
The whole calculation depends on three figures that are not in national law but in the town's tax bylaw: the tax rate, the coefficients by years and the allowances. They are found in the text of the bylaw published in the province's official gazette and, normally, on the town hall's online office. The version that matters is the one in force on the date the tax fell due, not today's.
| What to look for | Why |
|---|---|
| Tax rate | Each town sets it within the legal maximum, and it multiplies the base directly |
| Coefficients by number of years | The bylaw sets them without exceeding the legal maximums, which are updated every year |
| Reduction of the land's valor catastral | Only applies if the bylaw provides for it, after a collective revaluation |
| Allowances | The most common are on inheriting the main home in favour of certain relatives. They usually have to be requested: you must apply for them in time |
| How the tax is collected | Whether the town requires a self-assessment or issues an assessment, because that decides how the choice of method is made |
That last line is the one that most often decides the real outcome of a case, more than the numbers do. A taxpayer who self-assesses chooses the method when filing; one who receives an assessment has to appeal within a short period to choose it, and if they let it pass, the choice disappears with the deadline.
Questions that come up with “The two methods, with a worked comparison”
Want your municipal capital gains taken care of?
Send us the case and we will tell you what it needs.
Start here