The Spanish Constitutional Court has decided that the Regulations regarding the Plusvalia Tax are unconstitutional if there is no wealth increase.
But, what is the Plusvalia Tax?
This tax is like a capital gains tax. It is a tax that the seller of a property has to pay that is or should be calculated on the price difference when the property was bought and now that it is sold or transferred or inherited.
For example, if you bought a property in Spain for €125,000 in 2000 and you sell it for €160,000 in 2017, you have a profit and capital gains and you have to pay a tax for this difference in price.
However, the Ayuntamientos-City Councils- (the ones in charge of this tax) were charging the sellers with this tax even if they were selling their properties for less than when they bought them.
For example, if you bought a property in Spain for €160,000 in 2000 and you sell it for €125,000 in 2017, you don’t have a profit and you are losing money but you had to pay a tax anyway.
This is not fair and the Spanish Constitutional Court has decided that the Regulations regarding this tax are unconstitutional and if there is no wealth increase, and it can be proven, then the Ayuntamiento cannot charge you with the Plusvalia Tax.
Now the Rulings regarding this tax will have to be changed because they are declared to be unconstitutional.