Selling property in Spain – Tax ImplicationsCapital gains tax for Residents in Spain

Selling property in Spain Tax Implications

This is in addition to the Plusvalia previously mentioned, and is instead managed by the central tax agency. The benefit obtained is calculated simply reference to the difference between the purchase and the sales price. For Spanish residents the rate of tax is as follows:

  • Up to 6.000 Euros: 19%.
  • From 6.000 to 50.000 Euros: 21%.
  • From 50.000 Euros and upwards: 23%.

 

Capital gains tax for Non-residents in Spain

Firstly, it is necessary to take into account that on the day of the signing of the sales deeds, the purchaser will retain 3% of the sales price in order to comply with their obligation to deposit this amount with the Tax Agency, using Form 211, within a period of one month.

This 3% contributes towards the total central government Capital Gains tax, which is 19% of the net benefit obtained by the sale. In order to reduce the amount of the tax, the taxpayer in entitled to certain deductions based on the taxes and expenses paid both for the purchase and the sale of the property (purchase tax, Notary fees, Land Registry fees, “plusvalía” tax, legal fees, Real Estate fees, etc.).

Should there be no profit on the sale (or if the profit is less than the 3% of the purchase price initially retained by the buyer), there then arises the possibility of claiming back from the tax authorities the whole of the 3% retention or part thereof. Being able to do so may also depend on other factors such as having paid the previous four years non-resident tax.

It is also possible to have the money paid directly to your UK bank account – you just need to have the lawyer managing this for you to make the appropriate application to the Tax Office.

Exemptions from Capital Gains Tax

An exemption from Capital Gains tax exists for those residents over the age of 65 or those who reinvest in a new home.

The period for reinvesting the funds in the purchase of a new personal, primary, principal home is 2 years from the date of the sale of the property.

If a Spanish resident sells the home dwelling (having lived there for a minimum of 3 years prior to the date of sale) AND being 65 years of age or more, then the capital gains tax is totally tax free, without any other requirements.

The above exemptions apply only to tax residents in Spain.

If the seller invests the proceeds (fully or partially) of the sale of the Spanish property (being this property the habitual residence) in another property with the same purpose (being used as habitual residence), those funds would be tax free -this exemption is only to be applied to the citizens of certain countries (all of the European Union, and Iceland and Norway)-.

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