Plusvalia Tax in Tenerife

Vendors Stung by Double Payment

Owners selling their property in Tenerife are discovering that they are liable to pay the Plus valia tax on the transaction, yet when they bought the property they also had to pay the tax as buyers.  This effective ‘double payment’ has dismayed many sellers and is the result of a change in laws.

It was always supposed to be the seller who paid the Plusvalia, but in the boom years of property sales it was a sellers’ market so it was quite usual (in fact it was nearly always the case) for the private contract to stipulate that the buyer had to pay.  Who paid the Plusvalia was on the negotiating table, and because property was in high demand, it was the seller not the buyer who could dictate the terms.

However, the new 2006 Consumer Law changed the playing field by saying that any clause in a private contract which made the purchaser liable for this tax would be deemed abusive and therefore null and void.  This affected all developers selling off plan, as it was supposed to, but also removed the payment of this tax from the negotiating table for private resales of property.  The Plusvalia once again a tax for the seller, but this time the law made it illegal to agree otherwise.

Caught in the middle are owners who have found that they had to pay the tax when they bought the property, and again when they sell it, and although this has made many of them unhappy, there is nothing short of a change in law that can change it.