If you’re selling a property in Spain, there are certain tax implications. These differ from property sale taxes in the UK, and it’s important to understand your obligations to ensure that you don’t fall foul of the law.
There are two types of Spanish property tax which will affect the sale of your property, which we’ll look at in detail below:
Selling property in Spain taxes: Plusvalia
Plusvalia is a form of tax which must be paid to the town hall where your property is located. Plusvalia is calculated on the following criteria:
- The increase in land value since you purchased the property (known as “valor catastral”)
- The number of years you owned the property
Land value can be found on your IBI receipt. It increases every year, regardless of the actual market value of your house. This means that Plusvalia is due on your property, even if you’re going to lose money when selling it.
This matter is currently being challenged in courts throughout Spain, but to no practical effect. Put simply, when you sell your Spanish property, your local town hall will demand a payment.
Selling property in Spain: tax implications
It can be beneficial to try and avoid any nasty surprises by contacting your local town hall and requesting a calculation of Plusvalia before you sell your property. This way, you will have a rough idea of how much you will be required to pay.
If you are a non-resident, the buyer of your property could be found liable for payment if you have not paid the Plusvalia tax within 30 days of a sale going through. It is important to make the payment of Plusvalia a priority when selling a property in Spain, to avoid any unnecessary legal implications.
Selling a property in Spain: capital gains tax
As a seller, you are obliged to pay capital gains tax on any profits from your sale. Capital gains tax on property in Spain for residents currently sits on a sliding scale, between 19-23%. If you are a non-resident from an EU/EEA country, you’ll be expected to pay a flat rate of 19%.
Selling a property as a non-resident
If you are a non-resident from outside the EU/EEA, you’ll be required to pay 24% in capital gains. When selling your property, your buyer will also be required to withhold 3% of the property purchase price to pay to the Spanish tax authorities.
After you sell, you should file a tax return which accounts for the amount of the purchase price initially retained by the buyer of the property (typically 3%). You’ll need to pay the remaining amount of your capital gains tax within three months of the sale going through.
If the amount the buyer withholds exceeds the payable for capital gains tax, you may be able to claim a refund for the excess amount. It is therefore important to obtain proof of the original 3% tax paid by the buyer before filing your return and filling in any other necessary forms or legal documents.
If you are considering selling your Spanish property, then hope this article has been useful to you. To find out more about other costs associated with selling property in Spain, read our article: The cost of selling property in Spain.
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