This tax, just as in the UK or Ireland, is payable on any profit derived from the sale of the property. For 2013 the tax rate is set at 21%.
It is usual in the case of non-resident sellers that the purchaser will retain 3% of the stated purchase price to liquidate this tax on behalf of the seller.
Should the 3% not cover the entire liability then it is possible that the Spanish revenue will seek an additional payment from the vendor at a future date. On the other hand if 3% is greater than the Capital Gains liability then any surplus may be reclaimed. This should be carried out within three months of the sale via the relevant local tax office.
Exemptions to Capital Gains Tax
As well as deducting the initial purchase cost of the property, any costs incurred in improving or adding to the property may be deducted before applying the tax.
A special deduction applies to any homes purchase before 1994 and applies differently depending on when the property was sold.
Perhaps the most important exemption for Spanish residents that exists is the ‘exención por reinversión’ or exemption where the proceeds of the sale of a property are reinvested in another property.
In order for the exemption to apply the property must have been your habitual residence (as legally defined) and the proceeds must be reinvested within a period of two years following the sale of the old property.
Those over the age of 65 when selling the property and who have lived in the property for the prescribed period of time will benefit from this exemption regardless of whether they reinvest it or not.
Property owner in Spain? Need help managing non-resident and rental income tax in Spain?