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Taxes in Spain

Costa del Sol is one of the best locations to enjoy life under the sun, property taxes related to purchase & selling in real estate in Southern Spain, is something you need to consider. Here you have a brief information on the seller's taxes liability:

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 on. As from 1st January 2012 the Capital Gains Tax has increased from 19% to 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 receipts. Therefore, all purchase taxes, notary fees, legal fees etc can be deducted from the calculations.

Here you have an example:
Original purchase price: 400.000€
Taxes & fees incurred: 40.000€
Selling price: 490.000€
490.000 – (400.000 + 40.000) = 50.000€
50.000€ x 21% = 10.500€ Capital Gains Tax due

Residents are exempt from capital gains tax if they are:
- 65 or over and have lived in the property for 3 years or more
- If the property is a main residence and the net sale proceeds are reinvested in the purchase of another new home within two years

Spanish Plusvalia 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 is calculated according to the rateable value of the property and the number of years that it has been in ownership of the vendor.

Retentions

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.

If you are interested in selling your property on the Costa del Sol, contact us: