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The Taxes Behind Selling a Spanish Property

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In the latest in our series looking at Spanish taxes, this blog post provides information on the taxes involved when you sell a property in Spain.

Capital Gains Tax

Capital gains tax is by far the most complicated tax for any transaction involving Spanish property and you should leave its assessment and calculation in the hands of an expert tax advisor. Not only will they ensure you pay the right amount on time, they will check that all deductions and allowances are included so you pay no more than absolutely necessary.

Who is liable?

Everyone who sells a property for profit is liable for capital gains tax (CGT), but there are exemptions and allowances depending on your residence status. CGT on property in Spain differentiates between resident and non-resident sellers as follows:

Resident seller: Fiscal residents in Spain (you need proof of this) are exempt from CGT on the sale of their principal home if:

a)      They’re over 65.

b)      They reinvest all the profit in the purchase of another principal home in Spain within two years of the sale.

If you’re selling a property that isn’t your principal home or you cannot prove you’re a fiscal resident, you’re liable for CGT at resident income tax rates.

Non-resident seller: There are no exemptions from CGT for non-resident sellers of Spanish property. In fact, the buyer of your property will retain 3 per cent of the purchase price as a deposit towards your CGT liability. CGT for non-residents is levied at 21 per cent.

How much do I have to pay?

The taxable amount is calculated as follows:

Find your effective cost of purchase: you calculate your buying costs and add these to the purchase price to reach your effective purchase price.

Multiply by coefficient index: you adjust the property price by a coefficient index to account for the cost of inflation since you bought.

Find your effective cost of selling: you calculate the costs of selling your property and deduct these from the final sales price.

Calculate your final profit: you deduct your final sales price from your effective purchase price and apply the CGT rate to this figure.

Plus Valía Tax

This is a tax levied by the local council where the property is situated. The amount you pay depends on the increase in the value in the land since the time you bought and the area where the property is situated. Your lawyer will be able to give you an approximate idea of how much you can expect to pay (the exact amount is calculated on the day the title deeds are signed).

For more information about selling taxes and for expert advice on property in Spain contact Andalusian Lawyers.

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