1. Income tax (capital gains tax) for the seller
Capital gains, such as profits from the sale of real estate in Spain, are subject to taxation. On this capital gain, progressive tax rates will be applied which will determine the amount to be paid.
A distinction must be made between tax resident sellers and non-resident sellers.
- Calculation of the benefits of the sale
This profit is calculated from the difference between the price at the time of the acquisition of the property and its current selling price at the transfer of the property.If, for example, we bought the property at the time for 300,000 euros and sell it now for 500,000 euros, the capital gain will be 200,000 euros, on which tax will be calculated.
Some costs can be deducted in order to increase the acquisition value and this reduce the amount to be paid, by presenting the respective invoices: (Notary fees, Tax advisor, Land Registry Transfer Tax, in the case of second-hand properties; VAT and Stamp Duty, in the case of newly-built properties).
In addition, the cost of investments and improvements made to the property may be deducted: (Works to improve energy efficiency, hygiene, health and the environment. Accessibility to the home and the building. Replacement of electricity, water, gas and heating installations. Installation of infrastructures for Internet and digital television.)Costs can also be presented to reduce the amount of the actual transfer of the property, such as those derived from the sale (administration, cancellation of charges and mortgages, real estate agency commission).
- Fiscal residents
Tax residents in Spain pay tax on the sale of the property in their annual income tax return.On the amount of capital gains (only the gains!), the corresponding IRPF taxes have to be applied, calculated in progressive brackets according to the amounts. For example, if we have a gain of €10,000, the first €6,000 will be taxed at 19% and the remaining €4,000 at 21%.
Tax rate in 2024:
Gains up to 6.000 € : 19 %.
Gains from 6.000,01 € to 50.000 € : 21 %
Gains from € 50.000,01 to € 200.000 : 23 %
Gains from 200.000,01 € to 300.000 € : 27 %
Gains of more than 300.000 € : 28%The following are exempt from paying these taxes:
– resident sellers over 65 years of age, provided that their main residence is transferred and that they have resided there for at least 3 years.
– if the main residence is sold and the gain is reinvested in the purchase of another main residence, within a maximum period of 2 years.
- Non fiscal residents
Non-resident sellers in Spain are also obliged to pay a capital gains tax to the tax office.In this case the amount is withheld directly by the buyer by deducting 3% from the sale price registered in the deed.This amount is considered to be an advance on the subsequent gain, which can be accurately calculated by a tax advisor on the basis of the tax declaration.
These taxes are calculated after the signing of the deed on the capital gain derived from the sale of the property and 19% of the resulting amount is paid, minus the 3% already withheld by the buyer at the time of signing the deed.This 19% tax applies if the seller is resident in the European Union, Norway or Iceland.
If the seller is resident in another country, now including the United Kingdom, the percentage rises to 24%.
Non-resident sellers should bear in mind that a double taxation agreement is in force between Spain and other European countries, e.g. Germany.
Consequently, gains derived from the sale of a property in Spain must also be declared and taxed in the country of residence, where the amount of tax already paid in Spain will be deducted.
2. Mortgage
The costs for the cancellation of a mortgage as well as for its cancellation in the Land Registry are to be paid by the seller. These costs may vary depending on the financial institution and should be discussed with the bank before the actual sale.
3. Municipal added value tax (Impuesto de Plusvalía municipal)
This is a municipal tax that is paid on the increase in value of the land, not of the property, and is collected by the local councils.
To calculate this tax, the cadastral value of the land, the number of years of ownership of the property and the coefficient or percentage established by the local council must be taken into account.
The deadline for payment is usually 30 working days from the signing of the deed.
By law, the payment of this tax corresponds to the seller, although there have been and still are cases in which, by mutual agreement, it is the buyer who bears this cost.
4. Brokerage
The entire cost of the real estate agency or broker’s commission is generally paid by the seller.
The amount of the commission is generally determined at the moment of the written assignation of the sales contract and amounts to between 3% and 10% plus VAT.
