Which costs do you incur when selling a property?

When selling a property in Spain, you have to take into consideration that from the finally agreed purchase price you will have to pay/deduct some costs to calculate the net price that will be left over to you, “in your pocket”. These are different for the following two cases:

• In case of the sellers not being Tax Residents in Spain = Non-Residents
• In case of the sellers being Tax Residents in Spain

Important note: The fact that you may live in Spain with a “Residency card” does not mean you are a “Tax Resident” in Spain. You are only considered as such, if you are registered as tax resident. You must have carried out your main tax declarations once a year in Spain, in which you declare your income the same way as you would carry it out in your country of origin, if you had your first tax residency there.

1) Selling costs, in case of the sellers NOT being Tax Residents in Spain = Non-Residents:

3 % Retention on account of your Capital Gains Tax:

It is calculated on the value of the property sale and a general upfront payment on account of the Capital Gains Tax you could be reliable for, in case you made a capital gains between buying and selling the property. By law it needs to be retained by the buying party from you at Notary appointment, and paid into the Tax Ministry on your behalf.

The real tax to be paid is currently 19 % (for members of the EU, 24% for members of Non-European countries) on the NET capital gain, meaning the result of: Sales price MINUS Purchase price MINUS all tax-deductible costs you had during both, the purchase and the sales process.

If 19 % of the net capital gains are higher than the 3 % paid on account of this tax, you would have to pay the balance in addition to the Tax Ministry. In case of you not having made any benefit, but loss, or in case your 19 % tax due on the net capital gains is less than the 3 % retained, you can claim the whole amount or the balance back from the Tax Ministry.

Yet, to get the refund you will need to show that you have paid your Non-Resident Income Tax (and, if applicable, your Wealth Tax) for the past 5 years (or during the years you had the property, in case it was less than 5 years). If you have any question regarding this point, please do not hesitate to contact us. We are very happy to help you calculate your personal situation.

Plusvalia Tax to the Town Hall:

This is a tax to be paid to the Town Hall. It is a tax on the increase of the cadastral value only of the land that belongs to your property, between the date you bought and you sell. In case of a property being located in a community of owners, it will be calculated on the value of the participation of land your property has within this community of owners.

Steps have been started to approve a law that would avoid the Town Hall being able to charge this tax in case you made a loss between selling and buying the property. Yet, it has not been approved so far. Please do not hesitate to contact us, in case you have any question regarding this point.

We can also help you calculate this tax for your personal situation. To do so, we need a copy of your last IBI (local rates) receipt (including the cadastral value of the property, called „valor catastral“) and the exact dates of when you bought the property. The Plusvalia Tax is a tax-deductible cost, when calculating the above explained Capital Gains Tax for Non-Residents.

Agent’s commission:

These are the fees for our services to help selling your property, which we will have agreed upon with you during our property listing process. They will always have to be increased by the current Spanish VAT. We will, of course, present you an invoice for them, including this tax. They are also a tax-deductible cost, when calculating the above-mentioned Capital Gains Tax for Non-Residents.

Lawyer´s fees:

These are the fees for the services of your lawyer/solicitor to carry out the necessary paperwork for the sale, organize the Notary appointment, etc. They also have to be increased by the current Spanish VAT, you will receive your correspondent invoice and they are a tax-deductible cost as well, when calculating the above-mentioned Capital Gains Tax for Non-Residents.

2) Selling costs, in case of the sellers being Tax Residents in Spain:

In case of the vendors being Tax Residents all above mentioned costs will apply, such as

Plusvalia Tax,

Agent’s commission,

Lawyer’s fees,

except the 3% retention for the Capital Gains Tax for Non-Residents.  However, the Tax Resident will have to declare the sale of the property in his next annual Income Tax Declaration.

Depending on your income level, and whether or not you have obtained a benefit through the sale of the property or not, this will be included in your next annual tax declaration. We therefore recommend, asking a personal tax advisor in which way your tax declaration of the following year could be affected by the sale of the property.