When a property is sold in Spain, although buyers pay most of the costs, sellers are also liable for a number of taxes and fees.
Vendors are taxed on capital gains made as a result of the sale of property. The amounts due depend on: the length of time you have owned the property, any increase in value over that period, where you are resident for tax purposes, and your annual income during the fiscal year in which you sell the property.
Municipal capital gains tax (Plusvalía)
This is levied by the local Town Council (Ayuntamiento) on any property sold within its municipality in relation to the increase in value of the land upon which the property is placed. The taxable base is calculated taking into account the cadastral or rateable value of the property (in accordance with the Town Council’s own tables) and the time you have owned the property. In general terms, the longer you have owned the property, the more you pay. Even if you sell at a loss (i.e. for less than you originally paid), you may still be liable for tax if the land is deemed to have increased in value during your ownership. As a result, we recommend you always work out how much tax you will be required to pay, before putting a price on your property or agreeing a sale price.
You have 30 days from the date of signature of the public title deed to pay any tax due. If you are a non-resident, the buyer will retain tax due on your behalf, as he or she will become liable in case of non-payment. In some instances, the vendor’s tax liability is greater than the retention, in which case the Spanish Tax Agency has powers to seek to recover the amount due in your home country. On rare occasions, the demand from the Town Council may be less than the tax due, in which case both buyer and seller may be held liable for the difference.
Income tax (Impuesto sobre la Renta)
This is due to the Spanish Tax Agency (Hacienda) on any income earned during a fiscal year. The taxable base is calculated on the difference between the price you paid for the property (plus any costs and taxes) and the sale price (minus costs and taxes) and is levied according to the seller’s fiscal status. If you are resident in Spain, you pay tax on the increment in your income, at a variable percentage depending on your total earnings during the relevant fiscal year. If you are a non-resident, you pay a nominal fixed rate of 21% of the taxable base. By law, the buyer when buying from a non resident seller is required to retain 3% of the agreed purchase price to pay to the Spanish Tax Agency on your behalf. If you do not make a gain, you can request a refund of this amount, but the tax agency will not return the withholding until all outstanding taxes are paid.
Mortgage cancellation fees
If your property is mortgaged and the loan will be paid off at the time of sale, all costs are normally paid by the seller.
Estate agent fees
The fees you, the seller, pay your estate agent will depend on the deal you have negotiated, but this is normally 5% of the agreed sales price. This is subject to value-added tax (Impuesto de Valor Añadido, IVA), which is currently 21%. This generally seems high to vendors from the UK, but Spain is an extremely competitive market and every agent that endeavours to charge less either goes out of business or ends up raising rates. We recommend you take this amount into account when fixing a price on your property.
The remainder of the costs arising from the sale of a property are normally the responsibility of the buyer: Land Registry fees; transfer tax; value-added tax; Stamp Duty (Impuesto sobre Actos Jurídicos Documentados); as well as fees charged by the notary to draw up the public title deed in the new owner’s name. If no mention is made in the private purchase contract, the seller is liable for 80% of the notary’s fees.