I sold at a loss and the council is claiming the plusvalía

Marta Llorente bought a flat in Torrevieja in June 2007 for 210,000 €. She sold it in March 2026 for 168,000 €, almost nineteen years later and 42,000 € down. A month afterwards the town council sent her an assessment for 1,460 € in respect of the plusvalía municipal, the local tax on the increase in value of urban land that Spanish councils charge whenever a property changes hands. Her first reaction was to think the name or the property was wrong. It is not: the council has applied the formula it uses by default, which does not look at the price of the transaction. What Marta has to do is prove that there was no increase, and the law tells her exactly which papers to use for that.

With no increase in the land, the tax never arises

The tax on the increase in value of urban land taxes, as its name says, the gain on the land. For years it was assessed by applying coefficients to the valor catastral (the official value that the Cadastre, Spain's land and property register for tax purposes, gives each property) even when the owner had lost money. The Constitutional Court put that right in three judgments: 59/2017, of 11 May, struck down the law insofar as it taxed situations with no increase; 126/2019, of 31 October, added that the tax due cannot exceed the real gain; and 182/2021, of 26 October, struck down the whole method of calculation.

Royal Decree-law 26/2021 rewrote the tax and added paragraph 5 to article 104 of the consolidated text of the Local Government Finance Act (the TRLRHL, as it is known in Spanish). That paragraph says that there is no liability when "the absence of an increase in value" is shown by the difference between the values of the land on the dates of transfer and acquisition. If there is no liability, there is no tax to pay, not even a reduced amount.

The rules for comparing the two values

The comparison is not made with the gross prices in the deeds, but with the part that corresponds to the land. Article 104.5 lays down four rules:

1. On each date, you take the higher of the value stated in the deed and the value checked by the authorities, if they checked it.
2. The costs and taxes of the transaction are not added: notary, land registry, transfer tax or estate agents' commission stay out.
3. If the property has both land and a building, the value of the land is obtained with the proportion that the cadastral value of the land represents of the total cadastral value on the date of the sale.
4. That same proportion is applied to both prices, the purchase price and the sale price.

The third rule is the one that surprises people most. You do not use the land percentage there was in 2007, but the one on the bill for the IBI (the annual council property tax) for the year of the sale, and it is projected backwards onto the old price. How that percentage is obtained is explained in which part of the value is land.

Marta's figures with the Cadastre proportion

The 2026 IBI bill for Marta's flat shows a total cadastral value of 90,000 € and a land value of 34,200 €. The proportion is 38 %.

1. Value of the land at the sale: 168,000 × 0.38 = 63,840 €.
2. Value of the land at the purchase: 210,000 × 0.38 = 79,800 €.
3. Difference: 63,840 − 79,800 = −15,960 €.
4. Result: the land has lost value. The transfer is not liable to the tax and the 1,460 € assessment has no basis.

Since the same proportion is applied to both prices, in practice it is enough for the sale price to be lower than the purchase price for the land to come out lower as well. The proportion matters when there is a gain, because then it decides how much of it is attributed to the land.

When the loss only exists after the costs

Some sellers are convinced they have lost money when, for the purposes of this tax, they have made a gain. It happens when the loss only appears once you add what it cost to buy. Compare these three cases, all with 40 % land:

Case	Purchase price	Purchase costs	Sale price	Difference in land (40 %)	Liable?
Loss on price	210,000 €	16,000 €	168,000 €	−16,800 €	No
Loss only with costs	150,000 €	12,000 €	155,000 €	+2,000 €	Yes
Clear gain	150,000 €	12,000 €	190,000 €	+16,000 €	Yes

In the second case the seller paid 162,000 € in total and received 155,000 €, but the law does not let him add the costs. There is an increase of 2,000 € in the land and the transfer is liable. That said, such a small increase can serve as the taxable base if it is lower than the one produced by the objective method. We compare that second route in objective or actual method.

If you inherited the property or it was given to you

When the property was acquired for nothing, the acquisition value being compared is not a price, because there was none. Article 104.5 refers to the value declared for Inheritance and Gift Tax, or the value checked by the authorities if that is higher. Someone who inherited a flat and declared a high value for inheritance tax will find it easier to show that they later sold without a gain. Someone who declared a low value to pay less now meets the opposite effect. We develop this in I inherited and now I am selling.

How you assert that the sale is not liable

Non-liability does not apply by itself. Article 104.5 requires the person concerned to "declare the transfer" and to provide the deeds documenting the transfer and the acquisition. In practice, Marta's file needs:

• the 2007 purchase deed and the 2026 sale deed;
• the 2026 IBI bill or a certificate from the Cadastre showing the split between land and building;
• any checks on value carried out by the regional government, if there were any;
• a written submission that does the sum with the four rules and asks for the sale to be declared not liable.

The format depends on the ordenanza fiscal, the tax bylaw each council approves: some councils ask for a declaration on their own form and others require a self-assessment showing zero with the documents attached. Filing it within thirty working days of the deed stops the assessment from arriving. If you can, gather those documents and send them to us with the plusvalía form so that we can review the figures before they are filed.

If the assessment has already arrived

Marta is in the most common scenario: nobody filed anything and the council assessed the tax by the objective method using the data it receives from notaries. She has one month from the day after notification to lodge the appeal for reconsideration provided for in article 14.2 of the same consolidated text, which is addressed to the council itself. The appeal does not stop collection, so she needs to decide at the same time whether to pay and claim a refund or to ask for the payment to be suspended by providing a guarantee. The whole process is in can I appeal the assessment.

If she had paid a self-assessment without noticing the loss, the route would not be the appeal but a request to correct the self-assessment within the limitation period. We explain it in getting back a plusvalía already paid and, in more detail, in the guide on claiming back plusvalía paid in excess.

The loss also counts for income tax

Not being liable to the municipal tax does not settle everything about the sale. For IRPF (Spanish personal income tax), or for non-resident income tax if the seller lives abroad, Marta has a capital loss that is calculated with other rules: there, the costs of buying and selling are added, and the whole price is used, not just the land. That loss can be set off against gains within the limits of the income tax law. One does not determine the other, but the documents are the same, and it is worth preparing both calculations together. The guide on when no plusvalía is payable covers the other cases of non-liability and exemption.

The Salama Tax page on the municipal plusvalía summarises the whole tax and the documents we ask for in each type of transfer.