Nonequilibrium molecular dynamics simulations have been used to investigate phase transformations and plasticity in single-crystal iron from shock compression to dynamic tension and subsequent spall fracture. In consistence with experimental observations, the unloading wave following the compression front is found to evolve into a rarefaction shock at the reverse hexagonal-close-packed to body-centered-cubic (bcc) phase transformation, and a pressure hysteresis between the direct and reverse phase transformations is evidenced. The interaction of this unloading wave with the rarefaction wave reflected from the sample free surface classically induces tension within the crystal, which is found to drive a bcc to face-centered-cubic (fcc) phase transformation in agreement with very recent experimental observation under subnanosecond laser shock loading. At the atomic scale, the mechanism governing this bcc to fcc phase transformation is consistent with a Bain transformation path. The spall fracture process is observed to occur through voids nucleation and growth either at favorable sites (twin boundaries, bcc-fcc grain boundaries after partial transformation) or within the defect-free fcc crystal (after full transformation). Thus, the spall strength increases with the fcc phase fraction near the plane of maximum tension. An amorphous microstructure is observed around the voids, likely due to significant heating upon severe plastic deformation, in consistence with experimental clues from the literature.