Plusvalía Municipal in Madrid: revised calculation following the Constitutional Court, exemptions and reclaims for prior overpaid assessments

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 current statutory maximums of Art. 107.4 TRLRHL:

From 1 December 2026 the RDL 29/2026 table applies only if the Spanish Congress validates it, which it has not done as of 8 November 2026.

The rate is set by the Madrid Town Hall in its current tax ordinance, up to a legal maximum of 30% (Art. 108.1 TRLRHL).

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 same rate applies.

The taxpayer may choose the method that produces the lower liability. Which method gives the lower charge does not depend only on the years: it depends on whether the real gain attributable to the land exceeds the objective base (cadastral land value × coefficient). At the legal maximum, that base ranges from 9% of the cadastral land value (12 to 15 years) to 40% (20 years or more). For long holdings with strong appreciation the objective method usually gives less; if the real gain is small or there is none, the real method is better, and with no gain there is no tax (Art. 104.5 TRLRHL). That is why we always calculate both.

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 of the main home to the surviving spouse, descendants or ascendants: the Madrid tax ordinance provides a reduction of up to 95% 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; the percentage and conditions are those of the current ordinance (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 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:

1. Assessments not yet final (within the appeal period): full reclaim available via reposition appeal or economic-administrative reclaim before the TEAR de Madrid.
2. Self-assessments within the rectification period (4 years from payment): self-assessment rectification procedure with refund application.
3. 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 June 2016: 600,000 €
• Sale price in June 2026: 850,000 €
• Holding period: 10 years

Objective method: 200,000 × 0.12 (maximum legal coefficient for 10 years) = 24,000 € base. Liability, assuming a rate of 29% (each town hall sets its own; legal maximum 30%): 24,000 × 29% = 6,960 €

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 (6,960 € vs 32,190 €). The example uses the maximum legal coefficient set by Art. 107.4 TRLRHL; the Madrid Town Hall’s tax ordinance can set a lower one. The difference is enormous and underlines the importance of specialist advice to avoid filing under the wrong method.

Plusvalía municipal in Madrid inheritances: the reduction of up to 95%

In Madrid inheritances, the reduction of up to 95% 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. The percentage and conditions are those of the current ordinance.

For example, if the gross plusvalía municipal liability in a Madrid inheritance amounts to 8,000 €, assuming the 95% relief (the percentage is the one in the current ordinance) this would come 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.

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 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.