Plusvalía Municipal in Madrid: revised calculation following the Constitutional Court, exemptions and reclaims for prior overpaid assessments
The plusvalía municipal in Madrid — the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU) — is one of the taxes that generates the most uncertainty among property owners who sell, inherit or gift properties in the capital. Following the STC 182/2021 and Real Decreto-ley 26/2021, the calculation system changed radically: two methods now exist and the taxpayer has the right to choose the more favourable. However, the Madrid Town Hall applies its own annual coefficients, cadastral values in Madrid are particularly high across many districts, and self-assessment deadlines are strict. Many Madrid property owners continue to pay the tax without knowing they can choose the method, or that in certain situations — transfer at a loss, inheritance by the surviving spouse, main home — they could be exempt or pay significantly less.
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Specialised advice and personal service
At BMC we calculate the plusvalía municipal in Madrid using both methods — objective (Madrid Town Hall coefficients) and real (evidenced gain proportional to the land) — and select the most favourable for each client. We file the self-assessment with the Madrid Town Hall, advise on exemptions and reductions applicable under Madrid rules, and pursue reclaims for prior assessments where too much was paid. Our presence in Madrid allows us to handle transfers across all districts, from Centro to Vallecas or Hortaleza, with knowledge of local cadastral values and current coefficients.
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Madrid applies a general rate of 29% on the plusvalía municipal — choosing the correct method (objective or real) can mean thousands of euros in difference.
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The real method is preferable for recent transfers where the actual gain proportional to the land is lower than the objective base; the objective method tends to be better for long holdings with low cadastral values.
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Deadline
30 business days for sales; 6 months (extendable to 12) for inheritances from the date of death.
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If you sold at a loss, the plusvalía is not due and you can request a refund of amounts paid in the last 4 years.
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The problem
The plusvalía municipal in Madrid — the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU) — is one of the taxes that generates the most uncertainty among property owners who sell, inherit or gift properties in the capital. Following the STC 182/2021 and Real Decreto-ley 26/2021, the calculation system changed radically: two methods now exist and the taxpayer has the right to choose the more favourable. However, the Madrid Town Hall applies its own annual coefficients, cadastral values in Madrid are particularly high across many districts, and self-assessment deadlines are strict. Many Madrid property owners continue to pay the tax without knowing they can choose the method, or that in certain situations — transfer at a loss, inheritance by the surviving spouse, main home — they could be exempt or pay significantly less.
Our solution
At BMC we calculate the plusvalía municipal in Madrid using both methods — objective (Madrid Town Hall coefficients) and real (evidenced gain proportional to the land) — and select the most favourable for each client. We file the self-assessment with the Madrid Town Hall, advise on exemptions and reductions applicable under Madrid rules, and pursue reclaims for prior assessments where too much was paid. Our presence in Madrid allows us to handle transfers across all districts, from Centro to Vallecas or Hortaleza, with knowledge of local cadastral values and current coefficients.
How we do it
Property and transaction analysis
We review the title to the property, the acquisition and transfer dates, the cadastral land value from the Madrid Town Hall IBI receipt, and the actual sale price or the declared inheritance or gift value. We identify whether any exemption or reduction applies.
Comparative calculation of the two methods
We calculate the taxable base under the objective method (2024-2025 Madrid Town Hall coefficients applied to the cadastral land value) and the real method (difference between transfer and acquisition values in the land proportion). We select the lower result for the self-assessment.
Filing with the Madrid Town Hall
We file the IIVTNU self-assessment with the Madrid Town Hall (Oficina de Atención al Ciudadano or electronic office) within the statutory deadlines: 30 business days for onerous inter vivos transfers and 6 months (extendable to 12) for inheritances and gifts.
Reclaim and refund of overpayments
For prior transfers where the tax was settled on a real loss or under a method that would now produce a lower result, we analyse the available avenues: reposition appeal before the Town Hall, economic-administrative reclaim before the TEAR of Madrid, or a self-assessment rectification procedure.
I sold my mother's flat in Chamberí and the Town Hall sent me the plusvalía assessment. I assumed there were no other options, but at BMC they calculated the real method and it came out at half what was being demanded. They filed the corrected self-assessment and saved me more than 3,000 euros.
The plusvalía municipal in Madrid — or Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), the local municipal land value tax — is the local tax levied by the Madrid Town Hall on every transfer of urban property: sales, inheritances, gifts, exchanges and mortgage surrenders. Following the landmark STC 182/2021 of the Constitutional Court and the immediate reform under Real Decreto-ley 26/2021, the taxpayer may choose between two calculation methods and is exempt if the land did not appreciate. At BMC we calculate both methods, file the self-assessment with the Madrid Town Hall and reclaim prior overpaid assessments.
What the plusvalía municipal is and who pays it in Madrid
The IIVTNU taxes the increase in value of urban land (not the building) during the holding period, with a maximum of 20 years. In Madrid, the tax is collected by the capital’s Town Hall through its Oficinas de Atención al Ciudadano or the municipal electronic office. The person liable to pay is:
- The seller, in sales and exchanges (onerous transfers).
- The recipient (donatario), in gifts.
- The heir, in inheritance transfers.
In sales, the seller and buyer may agree that the buyer assumes the tax, but this arrangement is only binding between the parties and is not enforceable against the Town Hall, which may claim from the seller if the buyer defaults.
The two calculation methods in Madrid since November 2021
Real Decreto-ley 26/2021 established two alternative methods for calculating the taxable base:
Objective method (municipal coefficients)
The taxable base is obtained by multiplying the cadastral land value (shown on the IBI receipt) by the coefficients approved annually by the Madrid Town Hall, within the statutory maximums set by the State:
| Holding period | Maximum statutory coefficient |
|---|---|
| Up to 1 year | 0.14 |
| 2 years | 0.13 |
| 3 years | 0.12 |
| 4 years | 0.11 |
| 5 years | 0.10 |
| 6 to 10 years | 0.08 |
| 11 to 14 years | 0.07 |
| 15 to 19 years | 0.06 |
| 20 years | 0.06 |
The Madrid Town Hall applies a tax rate of 29% on the resulting taxable base, one of the highest within the statutory cap of 30%.
Real method (evidenced gain)
The taxable base is the difference between the transfer value and the acquisition value, multiplied by the proportion that the cadastral land value represents of the total cadastral value of the property. The applicable rate is likewise 29%.
The taxpayer may choose the method that produces the lower liability. In practice, for properties in Madrid acquired before 2010 with a long holding period, the objective method generally produces the lower result; for properties acquired between 2015 and 2020 with moderate appreciation or in outer districts, the real method can significantly reduce the liability.
Self-assessment deadlines with the Madrid Town Hall
Missing these deadlines triggers surcharges and interest, making it critical to know them:
- Onerous inter vivos transfers (sales, exchanges): 30 business days from the date of the notarial deed.
- Gratuitous inter vivos transfers (gifts): 30 business days from the deed.
- Transfers on death (inheritances): 6 months from the date of death, extendable by a further 6 months on application submitted within the first 5 months.
Filings are made at the Oficinas de Atención Integral al Ciudadano of the Madrid Town Hall or via the municipal electronic office (madrid.es), using digital identification (DNIe, certificate, Cl@ve).
Exemptions and reductions on the plusvalía municipal in Madrid
The national rules provide the following exemptions:
- Mortgage surrender of the main home: transfers made by insolvent mortgage debtors to cancel their debt with the financial institution (art. 105.1.c TRLHL).
- Inheritances and gifts of the main home to the surviving spouse, descendants or ascendants: the Madrid Town Hall applies a 95% reduction on the IIVTNU liability where the transferred property was the deceased’s main home and the beneficiary is the spouse, a child or a parent (Ordenanza Fiscal Reguladora del IIVTNU del Ayuntamiento de Madrid).
- Transfers between spouses on dissolution of the matrimonial property regime: where the property is awarded to one of the spouses on liquidation of the joint property regime (gananciales) without consideration, there is no taxable event.
- Non-profit entities: exemption for certain entities covered by Ley 49/2002.
The 95% reduction for the main home in inheritances is particularly significant in Madrid, where high cadastral values mean the IIVTNU on estates involving centrally located flats can reach very substantial amounts.
The STC 182/2021 and reclaims for prior assessments
On 26 October 2021, the Constitutional Court declared the entire objective IIVTNU calculation system unconstitutional (STC 182/2021), opening the door to reclaims for prior assessments. However, the ruling itself restricted its effects: it does not allow reopening final situations (those where no appeal was lodged in time or the assessment became final). The reclaim options depend on the specific procedural status:
- Assessments not yet final (within the appeal period): full reclaim available via reposition appeal or economic-administrative reclaim before the TEAR de Madrid.
- Self-assessments within the rectification period (4 years from payment): self-assessment rectification procedure with refund application.
- Final assessments: limited possibility of State legislative liability, subject to strict conditions (prior final adverse court ruling, among others).
At BMC we have managed numerous plusvalía municipal reclaims in Madrid across all of these scenarios, and offer a free initial assessment of the prospects before commencing proceedings.
Practical example: plusvalía municipal on a flat in the Salamanca district
Consider a flat in Madrid’s Salamanca district with the following characteristics:
- Total cadastral value: 450,000 €
- Cadastral land value: 200,000 € (44.4% of the total)
- Purchase price in 2015: 600,000 €
- Sale price in 2025: 850,000 €
- Holding period: 10 years
Objective method: 200,000 × 0.08 (coefficient for 10 years) = 16,000 € base. Liability: 16,000 × 29% = 4,640 €
Real method: total gain = 250,000 €; land proportion = 44.4%; taxable base = 111,000 €. Liability: 111,000 × 29% = 32,190 €
In this case the objective method is clearly more favourable (4,640 € vs 32,190 €). The difference is enormous and underlines the importance of specialist advice to avoid filing under the wrong method.
Plusvalía municipal in Madrid inheritances: the 95% reduction
In Madrid inheritances, the 95% reduction on the IIVTNU liability can represent very significant savings where the property was the deceased’s main home and the heir is the surviving spouse, a child or a parent. To claim this reduction the heir must prove that the property constituted the deceased’s habitual residence in the two years prior to death.
For example, if the gross plusvalía municipal liability in a Madrid inheritance amounts to 8,000 €, the 95% reduction would bring this down to just 400 €. This reduction does not apply automatically: it must be expressly requested in the self-assessment and the main home requirement evidenced (via municipal register, the deceased’s IRPF returns, etc.).
In cases involving estates where several heirs receive percentages of a property, the reduction applies proportionally to each heir’s share that meets the conditions. If one child was not resident in Madrid but another was, the first would not benefit from the reduction.
Plusvalía municipal and non-residents in Madrid
For non-residents in Spain who transfer properties in Madrid, the plusvalía municipal works in the same way as for residents in terms of the calculation: the same coefficients and the same 29% rate apply. In sales where the vendor is a non-resident, the Madrid Town Hall may require the buyer to make a retention from the price to secure payment of the tax. While not expressly regulated in the TRLHL, this practice is commonly applied by notaries and advisers in transactions involving non-resident vendors.
If you are a non-resident selling a property in Madrid, at BMC we manage both the plusvalía municipal and the 3% IRNR withholding (modelo 211), coordinating both obligations to avoid issues with the local and national tax authorities. Further information is available in our guide to tax planning for non-residents.
Why choose BMC for the plusvalía municipal in Madrid
- Free comparative calculation: in the first consultation we calculate both methods and tell you exactly what you owe.
- Local knowledge: we know cadastral values by district and have the Madrid Town Hall’s updated coefficients.
- End-to-end management: from the self-assessment through to defending before the TEAR de Madrid should a verification be initiated.
- Reclaim experience: we have obtained refunds in transfers involving real losses and in application of the STC 182/2021.
- Coordination with the notary and land registry: we coordinate with the notary to ensure deadlines are met from the moment of signing.
See also our glossary entry on the IIVTNU in the BMC tax glossary for the legal background.
For a comprehensive view of property taxation in Madrid, including IRPF on capital gains, Impuesto de Transmisiones Patrimoniales and VAT on new builds, visit our integrated tax planning section.
Read also our in-depth article on how to calculate the plusvalía municipal and the analysis of the Constitutional Court ruling and the system in force in 2026.
BMC has an office in Madrid. Find out about our Madrid office for local support.
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