surinenglish

Council 'plusvalía' death bonanza could end soon

Council  'plusvalía' death bonanza could end soon
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  • Town halls continue to charge the full tax on family members inheriting a property

Town halls on the Costa del Sol continue to enjoy millions of euros a year windfall from plusvalía tax charged when family members inherit a home, even if the heirs aren't selling the property.

The plusvalía is a tax that is based on an estimate of how much the land the property is built on has gone up since it last changed hands, and has been at the centre of fierce criticism as, until recently, councils based valuations on outdated land values and charged it even when real property sales prices had gone down.

While that particular way of applying the tax has been slapped down by a judge and councils are reluctantly falling into line, there remains another controversy over the levying of the tax on the heirs of properties when they change hands on the Spanish land registry.

A national law allows town halls to reduce the tax in the case of inheritance by up to 95 per cent but each town hall is free to put its own terms on what it lowers it by. Typically councils will only reduce it if the family member getting the property has been living there with the deceased beforehand.

For example, Estepona, Mijas, Benalmádena, Vélez Málaga and Nerja say that a beneficiary has to have been living with the deceased for the previous one to three years. In Marbella and Fuengirola, the tax is only reduced if it was the habitual residence of the deceased. The amounts add up. In Malaga city, of the 60 million euros collected through the tax in 2016, 19 million came from inheritances.

Now there may be a change coming, as a top court has ruled that Santander city council is discriminating against a son who didn't live with his deceased father.