Plusvalía municipal and IRNR: how your property taxes are calculated in Spain as a non-resident

"How much tax will I pay if I sell my property in Spain?" — that is one of the first questions non-resident clients ask me, and the honest answer is: it depends, because there is not one tax but several that interact. The two main ones are the plusvalía municipal (municipal capital-gains tax on land) and the IRNR. Let me separate them and show you how each is calculated, without impenetrable formulas.

Three distinct things that should not be mixed up

• Plusvalía municipal: collected by the Town Hall for the increase in value of urban LAND during the years you have been the owner. Only on transfer (sale, inheritance, donation).
• IRNR on the capital gain from the sale: collected by the State on the profit you make when you sell (the difference between what you paid and what you receive).
• IRNR on imputed income: collected by the State every year simply for owning the property, even if you do not rent it out or sell it.

The first two arise when you sell; the third, while you remain the owner. I will explain them in order.

Plusvalía municipal: watch out, it changed completely in 2021

This is the tax where the most outdated information circulates. In 2021 the Constitutional Court struck down the way it was calculated (judgment 182/2021) and the Government redesigned it via Royal Decree-Law 26/2021. If you are reading a guide written before that date, it is wrong. Today it works as follows.

First, and most importantly: if you sell without having gained value — you sell for the same or less than the land cost you — you do NOT pay plusvalía. Previously you paid regardless; now, if you can show there was no increase, there is no tax. This is only applied if you prove it, so it pays to get the documentation right.

Where there has been an increase, the law lets you choose between two methods and keep whichever is cheaper for you:

Objective method (using coefficients)

You take the valor catastral (rateable value) of the LAND — not the whole property; the IBI receipt shows them separately — and multiply it by a coefficient that depends on how many years you have owned it. The tax rate is then applied to that base. Both the coefficient and the rate are set by each town hall within the maximum limits set by national law.

Actual method (plusvalía real)

You calculate the actual increase in land value: the difference between what it costs you to sell and what it cost you to buy, in the proportion that corresponds to the land. If that actual increase is lower than the one produced by the objective method, you can request that this method be used instead, and you pay less.

IRNR: the State tax, at two different moments

The IRNR (Impuesto sobre la Renta de no Residentes — Non-Residents' Income Tax) affects you in two distinct situations: while you own the property and when you sell it.

While you own it: imputed income

Even if you do not rent the property out, the law considers that having a property at your disposal generates an "income" that must be declared each year (Modelo 210). It is calculated as a percentage of the valor catastral: 1.1 % if the rateable value was revised with effect from 1 January 2012, or 2 % if it was not. The IRNR rate is then applied to that amount.

Indicative example: a property with a valor catastral of 200,000 € whose value was revised a few years ago → imputed base 1.1 % = 2,200 € → at the 19 % rate (EU/EEA residents) that comes to around 418 € per year. This is a hypothetical figure to illustrate the mechanism; your case will depend on your rateable value and your country of residence.

When you sell: the capital gain and the 3 % withholding

On selling, you pay tax on the gain: the difference between the sale price and the purchase price (adjusted for costs and taxes). For non-residents, that gain is taxed at 19 %. And there is a key piece: the buyer is required to withhold 3 % of the price and pay it to the Tax Agency (via Modelo 211) as an advance payment of your tax.

That 3 % withholding is an advance, not the final tax. If 19 % of your actual gain is less than the 3 % withheld, you get the difference back: I apply for it by filing Modelo 210 after the sale. Many people never claim it and simply leave that money with the Tax Agency.

Add it all up before you sell

When you sell as a non-resident, the same transaction brings together: the plusvalía municipal (Town Hall), the IRNR capital gain at 19 % (State) and the 3 % withholding that the buyer makes. And if during the year of the sale you had not yet declared your imputed income, that comes into it too. It can seem complicated, and that is exactly why it is worth having everything calculated before you sign, not afterwards.

If you are thinking of selling — or you already own a property and want to know what you owe each year — get in touch and I will work out the full picture: plusvalía using Calp's ordinance, IRNR based on your country of residence, and the recovery of the 3 % where applicable. Better to know in advance.