Capital Gains Tax
This tax is applied to any increase in your property’s value during your ownership, calculated as the difference between your purchase price and the sale price. The amount is determined after deducting allowable expenses, including those related to the initial purchase and current sale, such as refurbishment costs (not routine maintenance), notary fees, legal fees, and estate agent commissions.
If the property is your primary residence and you reinvest the proceeds into a new home within the EU/EEA, you may be exempt from capital gains tax as a resident. This exemption also applies to non-residents from EU/EEA countries with a tax information exchange agreement with Spain. Additionally, if you are over 65 years old and have lived in the property for more than three years, you will also be exempt.
For non-residents, the capital gains tax rate is a flat 19%. For residents, the rates are:
For example, if you bought a property for €150,000 ten years ago and sell it for €400,000 today, the capital gains tax would be calculated on the €250,000 gain as follows:
Plusvalía Tax
This tax is levied on the increase in land value on which your property stands. The amount depends on the location, the duration of your residence, and the property’s cadastral value, as determined by the local town hall (ayuntamiento). Although the seller is typically responsible for this tax, sometimes the buyer may cover it.
Local Tax (IBI, Impuesto sobre Bienes Inmuebles)
This ongoing tax is based on the cadastral value set by the local town hall. It varies depending on factors such as the property’s value and location. For instance, a rural property might incur a tax of around €100 annually, while a property in a prime area could exceed €2,000. The owner is liable for this tax on January 1st each year, though it can be negotiated with the buyer.
Income Tax Provision (Retención)
Non-residents must pay a retención of 3% of the purchase price, which is submitted directly to the tax office to cover any tax liabilities from the sale. You can apply for a refund if your actual tax liability is lower than 3%.
Mortgage Status
Ensure you verify the status of any mortgage on the property and understand what is needed to cancel or transfer it to the new owner. This may involve fees to the bank (usually a small percentage of the outstanding balance), as well as to the Notary Public and Land Registry.
Energy Performance Certificate (EPC, Certificado de la Eficiencia Energética)
An official certifier, such as an architect or surveyor, must issue this certificate, which summarizes your property’s energy rating. The cost varies with property size. This document must be included in all property listings and advertisements.
Occupancy Certificate (Cédula de Habitabilidad)
This certificate confirms that your property meets basic habitability standards and is legally designated as a dwelling. Costs start around €50, depending on property size.
Land Registry Tax
Any changes to your property’s boundaries, facilities, or living space must be recorded with the Land Registry before or during the sale.
Professional Services
You may need various professional services during the sale process. A real estate agent can help find a buyer, while a lawyer (preferably one who speaks your language) can manage the sale and protect your interests. A neutral Notary Public will handle property certification, though the buyer usually covers this cost. A translator may also be useful for clear communication throughout the selling process.