- PSP Guide
- Selling a Property
EXPENSES WHEN SELLING A PROPERTY
When you sell your house you will need to pay tax to the Hacienda or tax office for the profits you will have made on the sale of your house. The amount you pay and how you pay them will depend on which of the following categories you fall into.
You are required to pay 19% on the profit from the sale of your house (the difference between what you declared when you bought the house and what you will declare when you sell the house).
On the day that you complete on the sale you will be charged a flat rate of 3% on the full amount of the declared sale price (the amount shown in the escritura or title deed). This amount will be deducted from the final money you will receive when you visit the Notary to complete on the sale of the property. (Buyers from non-resident sellers are required to withhold 3% of the total purchase price and pay it directly to the Spanish Tax Agency, usually through their lawyer or asesoria).
This 3% paid on the day of completion is a part payment of the amount of 19% to be paid on the profit made on the sale. You will be required to pay the remaining amount of the 19% on the profit when asked to by the tax office.
All non-residents are required to pay a 3% retention on the day of completion.
If the 19% on the profit works out to be less than the 3% on the full amount, it might be a good idea to ask your lawyer or asesoria to make an application to pay the 19% and then he can claim back the 3% already paid and just pay the lesser amount of 19%. A form 210H will need to be completed. This should be submitted within three months of the sale along with the last four years of non resident income tax. From the date that it is submitted you should allow around a year to receive the refund.
To qualify and be treated as a Spanish resident requires you to have been living in Spain for 3 or more years and to be able to prove this, by providing the previous 3 years’ tax returns, an escritura in your name that is more than 3 years old or a certificate from your local town hall to say that you have been registered as living there for more than 3 years. You will also need to prove that you intend to continue to live in Spain by providing a contract to purchase a new home or a rental contract for at least 6 months. Your lawyer or asesoria will apply for a certificate from the tax office to say that you qualify to be exempt from the normal retention of 3%.
In this situation you must pay 19% tax on the profits from the sale. This amount is not paid on completion of the sale, but is declared in your following year’s tax declaration. If within 2 years of the sale you invest all of the proceeds from the sale into another primary home, you will not have to pay this tax. If you do not, then you will pay 19% on what is not spent on your next home.
If you are selling a second Spanish home, you will be required to pay 19% on the profit. Rollover credit is not available for any other house than your primary residence.
Foreign residents who are aged 65 and over:
If you are selling your primary residence you are not liable to pay capital gains tax. Again you will need to prove that you have lived in Spain for 3 years or more and intend to continue living here. If you intend to go back to your home country you pay 3% tax on the full declared price on completion and then in your next years tax declaration you can claim this money back from the tax office.
If you haven't quite made the three year threshold and there is a compelling reason why you have to sell, the Spanish Tax Authority will take this into account, for example, if you have become disabled and can no longer manage to live in a high rise property or if you have to move because of work related reasons.
In addition to capital gains tax, the plusvalía tax is also paid by the vendor in this area.
The plusvalía tax is based on the increase in the value of your land from the date you bought it to the date you sell it and it is calculated by your local Town Hall.
Each Town Hall determines the amount of plusvalía to be levied on each house sale. The original purchase price and the sale price of the property do not have any effect on the plusvalía tax.
The plusvalía tax is calculated according to the rateable value of the land and the number of years it has been in the ownership of the vendor.
For an indication of the amount of plusvalía tax you are likely to have to pay, you need to go your local Town Hall with your Escritura and an IBI receipt for your property. They will be able to tell you the tax accrued if the property was to be sold on that date.
Mortgage Cancellation Fees
Banks will charge you a mortgage cancellation fee and this can vary from 0.5% and 2% which will be paid on the remaining balance of the outstanding mortgage. Please also remember that the mortgage should be cancelled at the notary and also at the land registry office. Fees for cancellation vary.