19% capital gains tax
When you sell a property and are not resident in Spain for tax purposes, the buyer is required by law to withhold 3% of the sale price and pay this to the Spanish tax authorities as an advance on the seller’s capital gains tax. This is a guarantee for the tax authorities that the tax will be paid.
If you sell at a loss, you can apply to have the amount refunded. The deadline for such an application is 3 months after the tax has been paid. However, if you have sold at a profit, you are obliged to settle with the tax authorities after the sale.
What can you deduct?
The gain is calculated on the basis of what the property cost when you bought it and how much you sold it for. You can deduct costs in connection with the purchase (e.g. tax, notary and property registry fees) and costs associated with the sale (e.g. estate agent’s fees and lawyer). You can also deduct some costs for upgrading the property. Note that original invoices issued in the seller’s name must be presented.
If the sale does not result in any gain, or if the gain is less than 3% of the sales price, the seller can apply for a refund of the amount paid. The requirement is that the seller has complied with their tax obligations to Spain.
It is everyone’s duty to familiarize themselves with the legal rules that apply where they have bought a property. You can’t use as an excuse that you’re a foreigner and didn’t know what rules applied as an excuse.
PLUSVALIA
In addition to the capital gains tax, the seller is obliged to pay a municipal tax on the increase in value of the property. This tax is known as “plusvalia” and varies from municipality to municipality.
It is the municipality that calculates this tax, but the estate agent will be able to estimate it for you if he has all the necessary information.
Good luck with your sale. If you need help – contact us.
