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Plusvalía Municipal in Mallorca: the municipal capital gains tax on sale and inheritance

The plusvalía municipal is one of the most misunderstood taxes when it comes to selling property or inheritance on Mallorca – not to be confused with the Spanish capital gains tax on the sale profit. Officially it is called Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU) and is levied by the municipality in which the property is located. It arises with every transfer of ownership: on sale, on inheritance and on gift. Since a landmark ruling by the Spanish Constitutional Court, however, you no longer have to pay it if your property has not experienced any increase in value at all. In this guide you'll learn who owes it, how the two permitted calculation methods work, what has changed in 2026 regarding the coefficients, and how you can challenge an excessive assessment.

Plusvalía Municipal Mallorca: Tax on Sale & Inheritance

Do you have a sale, gift or inheritance of a property on Mallorca coming up?

What exactly is the Plusvalía Municipal?

The Plusvalía municipal is not a state tax but a municipal one. It is regulated in Articles 105 to 111 of the Real Decreto Legislativo 2/2004, the law on local finances (Ley Reguladora de las Haciendas Locales). What is explicitly taxed is the increase in value of urban land (suelo urbano) during the period in which the property was owned by the selling, gifting or deceased person – not the value of the building itself. The tax is administered and collected by the Ayuntamiento where the property is located, which is why the amount and handling can differ from one municipality to another.

Feature Detail
Official name Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU)
Legal basis Art. 105–111 Real Decreto Legislativo 2/2004 (Ley de Haciendas Locales)
What is taxed Increase in value of the urban plot (not the building)
Who administers the tax The Ayuntamiento where the property is located
Triggering events Sale, inheritance, gift – any transfer of ownership

Who pays: sale, inheritance and gift compared

Unlike the Spanish capital gains tax, which is generally borne by the seller, liability for payment of the Plusvalía municipal can be distributed differently depending on the circumstances. In a classic sale between Spanish residents, the seller usually owes the tax. If, however, the seller is not tax-resident in Spain, a special rule applies: here the buyer is often held liable as substitute taxpayer (sustituto del contribuyente) – a point that foreign buyers on Mallorca should be aware of before signing.

Process Who owes the tax Special feature
Sale, seller resident in Spain Seller regular transfer inter vivos
Sale, seller not resident in Spain Buyer as substitute taxpayer "Non-Resident Seller Rule", relevant for foreign buyers
Inheritance Heir or legatee applies irrespective of any inheritance tax reliefs
Gift Recipient of the gift as with a transfer inter vivos

Note: The Plusvalía municipal is completely independent of inheritance and gift tax. Even if you receive a substantial relief on inheritance tax, the municipality can still demand the full Plusvalía. You can find more on the overall tax situation in the guide on Inheritance & Gifts in the Balearics.

The 2021 reform: no profit, no tax

For a long time, the Plusvalía municipal was considered a tax that applied even when a property was sold at a loss – calculated purely on the basis of the cadastral value and holding period, regardless of what actually happened in the market. This changed with the ruling of the Spanish Constitutional Court of 26 October 2021: the previously mandatory calculation method was declared unconstitutional, because it generated a tax liability even when no real increase in value had occurred. Since then, the principle "no profit, no tax" applies: if you can prove that your property has not increased in value at the time of sale, gift, or inheritance, the Plusvalía municipal is waived entirely.

In addition, the 2021 reform granted taxpayers a right of choice: you can choose between two calculation methods and automatically apply the one that is more favourable for you.

How is the Plusvalía calculated? Two methods compared

Since the reform, there is no longer a single rigid calculation scheme, but two parallel methods – taxpayers may choose whichever is more favourable.

Comparison of the two calculation methods for the plusvalía municipal on Mallorca: objective method versus real profit method.
Method Basis of calculation Sensible when …
Method A – objective method Cadastral value of the land multiplied by official coefficients, which depend on the municipality and the holding period the real profit is high and the objective method produces a lower result
Method B – real profit method Actual increase in value of the land (difference between sale and purchase price, calculated proportionally on the land value) the real profit is low, zero or negative

Note: Since the objective method is based on official cadastral values and municipality-specific coefficients, it's worth comparing both methods before filing your tax return in any case – ideally with a robust, independent valuation of the land share. An appraisal body accredited by the Bank of Spain can provide figures here that will hold up in court in the event of a dispute.

Plusvalía 2026: the government's back-and-forth on coefficients

Quite a lot has been happening around the plusvalía municipal for 2026. At the end of December 2025, the Spanish government initially updated the coefficients for the objective calculation method applicable for 2026 via a Real Decreto-ley. Just a few weeks later, in early February 2026, however, the government backtracked: it dropped – at least for now – the planned update to the multipliers used in the objective method. For owners on Mallorca, this means that the exact coefficients for 2026 remain in flux, and it's worth checking the specific figures for your individual case with the relevant municipality or with a tax adviser, rather than relying on generic online calculators.

Date Event
26.10.2021 Constitutional Court ruling overturns the calculation method that had been mandatory up to that point
from 2021 Reform: right to choose between two methods, exemption where there is no increase in value
December 2025 Real Decreto-ley updates the coefficients for 2026
February 2026 Government withdraws the update – no new coefficients for now

Note: Keep an eye on this topic if your sale, gift or inheritance case is not due until later in 2026 – as of February 2026, the coefficient question had still not been finally settled.

Plusvalía in the case of inheritance on Mallorca

In the case of an inheritance, the plusvalía municipal is payable regardless of how the inheritance tax itself works out. A frequently cited example from Madrid illustrates the problem: a pensioner there inherited a flat and, thanks to a 99 percent reduction, paid almost no inheritance tax – yet the Madrid council demanded around 24,000 euros for the municipal capital gains tax, despite a 15 percent bonus granted on the plusvalía. Cases like this show that inheritance tax reductions at regional level say nothing about what the council will demand for the plusvalía – these are two entirely separate taxes with different authorities responsible for them.

Some municipalities grant their own reductions or exemptions on the plusvalía for direct heirs; whether this applies to your municipality on Mallorca, and to what extent, should be checked directly with the relevant Ayuntamiento, as the rules vary from place to place.

Note: If the estate includes a property on Mallorca, it's worth looking at the overall strategy – including the question of whether a lifetime gift could be more tax-efficient. More on this in the guide Inheritance & Gifts in the Balearics.

Non-resident sellers: the special rule for buyers

If you buy a property on Mallorca from a seller who is not tax-resident in Spain, you should actively clarify the question of the Plusvalía municipal at the notary appointment. In these constellations, the payment obligation can pass to the buyer as substitute taxpayer – a mechanism that buyers often only notice once the town hall sends an invoice after the notary appointment. Raise this topic with your lawyer and the notarising notary early on, so that the allocation of costs is clearly regulated in the purchase contract.

How to proceed correctly, step by step

  1. Identify the process: Sale, gift or inheritance – each case has its own deadlines and taxpayers.
  2. Check the cadastral value and land share: Ask the town hall for the cadastral value (valor catastral) and the land share contained within it.
  3. Have both calculation methods worked out: Compare the objective method with the real profit method to choose the more favourable option.
  4. Secure proof of the absence of any increase in value: If there is no real profit, document the purchase and sale price, or the historical value, carefully.
  5. Submit the declaration to the relevant town hall: The tax is registered with the Ayuntamiento in the location of the property.
  6. If in doubt, have an objection reviewed: If the assessment is too high, an appeal against the notice can be worthwhile.

Deadlines and reclaims

The town hall sets specific day-based deadlines within the framework of legal requirements, which is why, in case of doubt, you should enquire directly with the relevant Ayuntamiento or your tax adviser. What is clear is that for sales and gifts between living persons, the registration is due considerably sooner than for an inheritance, for which a longer period is usually allowed. If too much Plusvalía was paid in the past, it's worth looking back: reclaims and objections against an assessment are generally possible as long as the payment is no more than four years in the past.

Situation Recommendation
Sale or gift between living persons Registration shortly after notarisation; arrange the date directly with the notary
Inheritance Longer statutory period, but enquire with the Ayuntamiento early on
Plusvalía assessed too high in the past Reclaim/objection generally possible retroactively for up to four years

Most common mistakes

  • Confusing Plusvalía with the Capital Gains Tax: These are two separate taxes with different assessment bases and, in some cases, different taxpayers.
  • Assuming that no tax is due automatically in case of a loss: The absence of a value increase must be actively proven and claimed.
  • Checking only one calculation method: Anyone who doesn't compare both methods may end up paying more than necessary.
  • Overlooking the Plusvalía in inheritance cases because the inheritance tax is low: Both taxes run independently of each other.
  • Not contractually clarifying the cost issue for non-resident sellers: The special rule on the substitute taxpayer can catch buyers off guard.
  • Ignoring the deadlines of the respective municipality: Since administration is handled locally, procedures differ between municipalities in Mallorca.

What comes next?

After registering the Plusvalía municipal, you should check whether further tax obligations arise from the same transaction – such as the Capital Gains Tax on a sale or the inheritance tax in the case of an inheritance. The ongoing property tax IBI also continues independently and should be reassigned as part of the transfer of ownership. Anyone wishing to rent out the property in future rather than sell it will find further information in the Renting Out section.

Checklist: Plusvalía municipal in Mallorca

  • Identified the responsible Ayuntamiento and its requirements
  • Obtained the cadastral value and land share of the property
  • Compared both calculation methods
  • Documented proof of actual value increase (or lack thereof)
  • Contractually clarified the taxpayer question for non-resident sellers
  • Observed the deadline for registration with the municipality
  • Checked previous payments for possible reclaim (four-year period)
  • Coordinated interaction with Capital Gains Tax or inheritance tax

Conclusion

The Plusvalía municipal remains an independent, locally administered tax item in Mallorca, relevant equally to sales, inheritance and gifts – but since the 2021 reform, it only applies if there is an actual increase in the value of the land. Anyone who compares both calculation methods, is aware of the special rule for non-resident sellers, and keeps an eye on deadlines and possible reclaims will avoid the most costly surprises. Since the coefficients for 2026 are still subject to change, it is worth getting an up-to-date check from a tax advisor or lawyer experienced in Mallorca before any transaction.

Official sources

What exactly is the Plusvalía Municipal?
It is the municipal tax IIVTNU (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana), regulated in Art. 105–111 RDL 2/2004, which taxes the increase in value of urban land upon transfer of ownership.
Do I also have to pay the Plusvalía if I sell at a loss?
No. Since the Constitutional Court ruling of 26 October 2021 and the subsequent reform, the rule is: no real increase in value, no tax.
Who pays the Plusvalía in the case of inheritance?
The heir or legatee, regardless of any benefits granted under inheritance tax – both taxes run separately.
How is the tax calculated?
You can choose between an objective method (cadastral land value x official coefficients) and a real profit method, and apply whichever is more favourable.
Are there new coefficients for the Plusvalía in 2026?
Initially, the coefficients were updated at the end of 2025 by Real Decreto-ley, but the government withdrew this update again in February 2026, at least for the time being.
What happens if the seller is not a tax resident in Spain?
In such cases, the buyer can be held liable as substitute taxpayer for the Plusvalía – this should be clarified in the purchase contract.
Can I reclaim overpaid Plusvalía?
Yes, refund claims or objections to an assessment are generally possible, as long as the payment was made no more than four years ago.
Which authority is responsible for the Plusvalía municipal?
The Ayuntamiento in the municipality where the property is located – the tax is therefore administered locally, not uniformly across the country.