Selling a Property in Spain
Selling a property in Spain is a relatively straightforward process, but as with buying a property, we recommend that sellers engage the services of a professional lawyer to assist and advise them in the process. Sellers need to be aware of several facts before entering the process.
The Seller's Tax Liability
Capital Gains Tax
The seller will be responsible for the payment of the capital gains tax. This is the tax based on the increase in value of the property from the original purchase date to the date that the property is sold on.
For Non Residents, the rate is currently 19%.
For Residents, the current rates are on a sliding scale.
For the first €6,000 - 19%
From €6,000 - €50,000 - 21%
€50,000 + 23%
Any conveyance costs in the buying and selling of the property can be deducted as long as these costs are accompanied by official receipts. Therefore, all purchase taxes, notary fees, legal fees, etc can be deducted from the calculations.
Fiscal Residents are exempt from Capital Gains tax if they are:
*65 or over and have lived in the property for 3 years or more
*If the property is a main residence and the net sale proceeds are reinvested in the purchase of another new home within 2 years
Plus Valir Tax
Sellers are responsible for paying the Plus Valir . This tax is set by the local authorities and is based on the increase in the value of the land (not the property - the selling price has no effect on the plus valir tax) from the date the owner acquired the property to the time of the present sale. The local authorities will determine the amount and is calculated according to the rateable value of the property and the number of years that it has been in ownership of the vendor.
Sellers must also pay the fees for cancellation for any encumbrances on the property such as mortgages, unless otherwise agreed between the buyer and seller. If the buyer is intending on purchasing with a mortgage then they may want to consider simply taking over the seller´s original mortgage, this will be cheaper than setting up a new mortgage. It is always important to check the terms and conditions first.
If the seller is a non resident, it is important to be aware that the buyer is obliged to withhold 3% of the purchase price and pay this amount directly to the Spanish Tax Authorities. This is a way of ensuring that the capital gains tax (CGT) is paid by the vendor and to prevent them from taking the money and not paying their tax bill. After the CGT is calculated, the seller will either receive a refund or be billed for an additional amount depending on the amount of the tax that is due. If the buyer does not withhold this amount they will automatically become responsible for the sellers CGT.