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Sell a property in Spain

Selling a property in Spain is something that is not extremely complicated but, like a purchase, we recommend the intervention of a lawyer who is responsible for supervising and advising throughout the process, mainly in the drafting of the contract and in the tax aspect.

Tax liability of the seller

The seller will be responsible for the payment of the capital gains tax. This tax is levied on the increase in the value of the property, that is, the difference between the price of the property at the date of purchase and the sale price. Its amount is 21%. Any additional costs implicit in the sale of the home can be deducted provided they are accompanied by the corresponding invoices. Therefore, all taxes inherent to the purchase, notary and legal expenses, etc. they can be deducted in the calculation of the capital gains tax.

The residents exempt from declaring this tax are:

• Those over 65 years of age who have lived on the same property for a minimum of three years.
• If the net proceeds of the sale are reinvested in the purchase of another property within a period of two years.

The seller is responsible for the payment of the Capital Gains Tax although sometimes an agreement can be reached with the buyer. This tax is levied by the local council and is based on the value of the area where the property is located and not on the property (the value of this does not influence the goodwill tax) between the date of purchase of the property and the date it was sold. The value is established by the City Council according to the cadastral value of the land and the number of years that it has belonged to the seller.

The seller is responsible for the payment of any lien that affects the property, for example mortgages, unless otherwise agreed between the buyer and the seller.

If the buyer is going to make the purchase of the property through a bank mortgage, he could consider changing the name of the mortgage from seller to buyer (always considering the terms and conditions of the existing mortgage) since in this way it could be more economical than applying for a new mortgage.

When the purchase is made directly to the real estate developer: with new home´s IVA a 10% rate is applied about the purchase price. When the purchase is made to another owner, the Transmission Tax is paid Assets (ITP) as specified in the following table:

• Purchase price 0 – 400.000 €: 8% Tax type
• Purchase price 400.000€ – 700.000 €: 9% Tax type
• Purchase price From 700.000 €: 10% Tax type

If the seller is not a resident and has owned a property for less than 10 years, it is important to know that the buyer is required to retain 3% of the purchase price and deliver it to the Spanish Treasury. In this way, the Government assures that the buyer will pay in its IRPF the corresponding tax derived from the sale of real estate capital. Once the exact amount has been calculated, the seller will receive a refund or an additional payment will be required to cover the total payment of the tax.

If the seller does not retain this amount from the buyer, he must know that he becomes responsible for the payment of this tax.

Not long ago it was common in Spanish society to declare a sale price much lower than the real value in order to reduce the taxes that both buyer and seller had to pay. Currently the Spanish Treasury remains very vigilant to eradicate these practices, so if the government appraisers estimate that the declared price of the property is very low, high penalties are imposed.

In our real estate we recommend our clients not to get involved in this type of activities.

The employees who work at Kristina Szekely have extensive experience and know all the current legal and tax regulations. We are at your disposal to help you and offer you our services when putting your property for sale through our company. If you have any questions, please do not hesitate to contact us, our advisors will gladly assist you. If you wish, you can use our direct customer service, to fill in your details below.