1. Income tax (capital gains tax) for the seller
Capital gains such as profits produced by way of the sale of real estate property in Spain are subject to the Spanish income tax.
Calculation of the benefits of the sale
This profit is calculated from the difference between the price of the property at the moment of purchase and the current sales price, deducting the corresponding purchase and maintenance costs.
In some cases the Spanish Ministry of Finance and Public Administration checks if the sales price is realistic and, if otherwise, it applies the corresponding tax based on the current market value.
Tax for fiscal non-resident real estate sellers
Since the 1st of January 2015 the tax rate for non-residents is 20% (21% before)
Fiscal residents tax their gains as follows:20% of gains up to 6,000.-€
22% of gains from 6,000.01€ up to 50,000.-€
24% of gains over 50,000.-€
In both cases the tax is transferred to the Ministry of Finance within 4 months after signing the public sales-purchase deed before the notary by means of the pertinent tax return.
Sellers who are non-residents in Spain are obliged to immediately pay to the Ministry of Finance, via the buyer, 3% of the sales price reflected in the sales-purchase deed. This amount is considered as advance payment on the subsequent profit and your tax advisor will calculate the exact amount in your tax return.
Non-resident sellers need to be aware of the international double taxation agreement which exists between Spain and other European countries, also the UK.
Therefore, the profit obtained by way of the sale of real estate in Spain have to be declared and taxed as well in the country of first residence, whereby the amount already disbursed for taxes in Spain will be deducted.
The costs for the cancellation of a mortgage as well as for its cessation in the Land Registry are to be paid by the buyer. 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 communal or municipal tax which accesses the value increase of the property since its last sale. This growth in its value is settled by the application of a yearly established percentage which is calculated by the relevant administration upon the value of the property.
Legally the payment of this tax corresponds to the seller, although in some cases and by mutual agreement, it is the buyer who bears this expense.
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.