SELLING A PROPERTY IN SPAIN
Selling a property in Spain is a relatively simple process, but as with buying a property, we recommend that sellers engage the services of a professional lawyer to assist and advise them in the process. Sellers need to be aware of several facts before entering into the process.
- CAPITAL GAINS TAX
The seller will be responsible for the payment of his Capital Gains Tax. This is the tax based on the increase in value of the property from the original purchase date to the date that it was sold. Capital Gains Tax is now 21%. Any conveyance costs involved in the buying and selling of the property can be deducted as long as these costs are accompanied by official invoices. Therefore, all purchase taxes, notary fees, legal fees etc, can be deducted from the calculations.
- PLUSVALÍA TAX
Sellers are normally also responsible for paying the Plusvalia Tax although this can sometimes be negotiated to be paid by the buyer. This tax is set by the local authorities and is based on the increase in the value of the land (not the property – the selling price has no effect on the plusvalia tax) from the date the owner acquired the property to the time of the present sale. The local authorities will determine the amount and it is calculated according to the rateable value of the property and the number of years that it has been in ownership of the vendor.
Sellers must also pay the fees for cancellation for any encumbrances on the property such as mortgages, unless otherwise agreed between buyer and seller. If the buyer is intending on purchasing with a mortgage then they might want to consider simply taking over the seller’s original mortgage (being careful to check the terms and conditions), as this will be 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 be aware that the buyer is obliged to withhold 3% of the purchase price and pay this amount directly to the Spanish Tax authorities. This is a way of ensuring that the Capital Gains Tax (CGT) is paid by the vendor and to prevent them from taking the money and not paying their tax bill. After the CGT is calculated, the seller will either receive a refund or be billed for an additional amount depending on the amount of tax that is due. If the buyer does not withhold this amount they will automatically become responsible for the sellers CGT.
We are happy to advise any owner choosing to list their property with us. If you would like to speak Angela or Ana about listing your property, or have any questions that are not covered here, do not hesitate to contact us.