When selling your property in Spain, it is best to take into account Spanish municipal and national capital gains taxes. In this article, we discuss taxes when selling Spanish property.
1. Plusvalía Municipal
This tax, imposed by the municipality, is based on the increase in value of urban land since the time of purchase. The capital gains tax does not apply to rustic plots.
The tax is calculated based on the cadastral value and the municipal rate. While this tax can vary by location, a recent amendment allows sellers to avoid paying it if they can prove that there has been no increase in value.
Find more information on how to calculate the municipal capital gains tax here.
2. National capital gains tax
In addition to the municipal tax, you also pay national capital gains tax (ganancias patrimoniales derivadas de la venta de inmuebles) on the profit you make on the sale of your property. This applies to both Spanish residents and non-residents. Residents pay a progressive rate of 19% to 26%, while non-residents pay a flat rate of 19%.
The taxable capital gain is calculated by reducing the sale price by the original purchase price. Certain costs such as purchase costs, renovation costs and selling costs may be deducted. For example, estate agent fees, notary fees, municipal capital gains tax and the cost of value-increasing renovations.
In addition, elderly people (65+) who sell their family home can enjoy a tax exemption under certain conditions. Sellers who sell their main home and reinvest in a new main home within two years may also qualify for partial exemption. However, this scheme does not apply to the sale of second homes or investment properties.
Find more information the national capital gains tax here.
3. 3% withholding tax for non-residents
For non-residents of Spain, the buyer is legally obliged to withhold 3% from the sale price and remit it to the Spanish tax authorities. This withholding tax is not an additional tax, but an advance on the national capital gains tax due. If the amount withheld exceeds the final tax amount, you can reclaim the difference. The effective refund may take up to a year.
Read more about the 3% retention for non-residents.
Do you have questions about taxes when selling Spanish property, or are you thinking of selling your property in Spain? Feel free to contact with us. Our team is ready to expertly guide you through the entire sales process and all associated returns.
