Municipal capital gains tax — known as Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU)— is a local tax levied on the increase in the value of urban land between the time a property is acquired and when it is transferred (whether through sale, donation, or inheritance). It is a municipal tax administered by Malaga City Council and applies to all owners of urban property located in the city.
📌 Who must pay municipal capital gains tax in Malaga?
- Seller of the property: when a property is sold, the person transferring ownership is normally required to settle and pay this tax.
- Heir or donee: in the case of inheritance or donation, the tax is levied on the person receiving the property.
- Exceptions: in practice, if there has been no real increase in the value of the land between the purchase and the transfer—for example, because the market value has remained the same or has fallen—you can file the declaration and prove to the local council that there is no gain, meaning that no tax is payable.
🧮 How is municipal capital gains tax calculated in Malaga?
The general formula consists of:
- Cadastral value of the land: the value of the urban land assigned to the property is used (this appears on the property tax bill).
- Increase coefficient: a percentage that depends on the number of years that have elapsed between the acquisition and transfer of the property.
- Municipal tax rate: this is a percentage set by the local council (which cannot exceed the legal maximum).
Simplified example:
If the cadastral value of the land is €90,000, the coefficients for years of ownership are applied and then multiplied by the tax rate set by the City Council to obtain the final amount.
📌 This method is known as the objective method (based on a calculation), which is detailed below:
METHOD 1: Objective system
Formula:
Cadastral value of the land × coefficient according to years of ownership
- The maximum computable period: 20 years.
- The maximum coefficients are set by state regulations, but the City Council may approve its own within those limits.
- The municipal tax rate cannot exceed 30%.
📌 Professional recommendation: verify the updated cadastral value (review possible collective valuation procedures).
METHOD 2: Actual system
Formula:
(Transmission value – Acquisition value) × land ratio
Where:
Land ratio =
Cadastral value of the land / Total cadastral value
This method is mandatory when the actual increase is less than the result of the objective method if the taxpayer so requests.
⚠️ If the actual increase is non-existent or negative → there is no liability.
📅 Deadlines and formal obligations
- The tax return and payment must be submitted within the period established by the City Council after the transfer, usually within 30 business days from the date of sale or transfer.
- Although the tax is generally paid by the seller, in sales contracts it is customary to agree in writing who will take care of the paperwork, always in accordance with municipal regulations.
Changes and bonuses in effect for 2026
Malaga City Council continues to apply various allowances and reductions on municipal capital gains tax, especially in cases of inheritance:
- For inheritances between cohabitants, the allowance can be up to 95% of the tax liability, especially if the requirements for cohabitation and cadastral value are met.
- For non-cohabitants in mortis causa transfers, a 37.5% rebate has been announced for 2026 as part of municipal tax ordinances, with the aim of moderating local tax pressure.
Currently, municipal ordinances will keep the main local taxes frozen, including capital gains tax, without any updates linked to the CPI.
It is also important to know that at the national level there is case law and regulations that allow you to avoid paying capital gains tax when there is no real increase in the value of the land between the purchase and sale of a property, provided that the corresponding proof is provided.
📊 Tax advice for property owners in Malaga
If you are about to sell, inherit, or donate a property in Malaga, consider the following:
- Review the evolution of land value and compare whether there has been a real increase.
- Seek professional advice to assess whether it is better to opt for the objective or actual calculation method.
- Check whether you can apply any allowances, especially in the case of inheritance between family members living together.
- Be sure to file your return and pay by the legal deadline to avoid late fees or penalties.
Recommended tax strategy before selling in Malaga
- Before signing the deed:
- Calculate municipal capital gains tax.
- Calculate capital gains for income tax purposes.
- Assess joint impact.
- Check whether it is advisable to wait until a specific fiscal year.
- Analyze possible exemptions (people over 65, reinvestment in primary residence, etc.).
- A real estate transaction must be analyzed as a whole, not tax by tax.