Advice to Sell
A Property in Spain
THE SELLER’S TAX LIABILITY
The seller will be responsible for the Capital Gains Tax. This is the tax based on the increase of the property from the original date of purchase to the date it was sold. Since January 2012, Capital Gains Tax has increased from 19% to 21%. It is worth noting however, that all expenses that are incurred in the purchase and sale of the property are deductible if the original receipts of such are provided. Therefore, all purchase taxes, notary fees, agency fees, legal fees, etc. can be deduced from the overall calculations.
Capital Gains Tax:
Sellers are responsible for the payment of Capital Gains Tax. This tax is set by local authorities and is based on the increased value of the land from the date that the owner acquired the property until the time of the sale. Local authorities determine the amount to be paid and the calculation is based on the appraised value of the property and the number of years in which it has been owned by the owner.
Sellers are also responsible in paying cancellation fees on the property, such as the mortgage. If the buyer is intending on purchasing with a mortgage, they may consider taking over the seller´s original mortgage as it could work out cheaper than setting up a new mortgage.
If the seller is a non resident and has owned the property for less than 10 years, it is important to know that the buyer is obliged to withhold 3% of the purchase price and pay this directly to the Spanish Tax Authorities. In this way, the Spanish government ensures that the buyer pays the tax due from the sale of real estate capital (Capital Gains Tax). Once the exact amount has been calculated, the seller will receive a refund or be billed for an additional amount depending on the amount of tax that is due. If the seller does not retain this amount, the buyer should be aware that it is them who become liable for the payment of this tax.