Cost of selling a house in Spain

Have you made the decision to sell your home in Spain? This article is here to recommend how we can help you plan the sale to minimize the extra costs of selling a home in Spain, for example, in order to save on taxes. 

Please note that for sellers who are tax residents in Spain, deductions are available, and sometimes the transfer tax can be free. On the other other hand, the cost of legal fees for selling a house in Spain can become a large cost associated with the selling process. We will discuss all of these aspects in detail below.

What Costs are Involved in Selling a Property in Spain?

Capital Gains Tax

One of the costs of selling a house in Spain is the Capital Gains Tax (CGT). In order to calculate this correctly, we must pay special attention to whether the seller is a Non-Resident or Tax Resident.

  • CGT for Fiscal Resident and Non fiscal Resident

Article 24 of the LIRNR and its reference to article 33 LIRPF regulate how capital gains are quantified, both for resident and non-resident taxpayers who sell their home or property in Spain.

In general, the gain will be determined by the difference between the transfer and acquisition values.

Net Profit = Sales Price – Purchase Price

  • Sales Price 

(+) Actual amount of the transmission

(-) Expenses associated with the sale (Tax on the Increase in Value of Urban Land – Plusvalia Municipal –, lawyer’s invoice etc.)

  • Purchase Price 

Purchase value will be the sum of the following items:

(+) Actual amount of the acquisition

(+) The cost of the improvements (in case of reforms of the housings; they should fulfill a series of requirements established by law)

(+) Costs (notary’s office, property register, lawyer etc.)

(+) Taxes inherent to the acquisition (Stamp Duty – AJD, VAT or Stamp Duty – ITP )

(-) Depreciation. Depreciation is an amount of money used for improvement costs. This depreciation value should have been applied over the period of time the property was rented for, which is then deducted from the acquisition value to calculate the Capital Gains Tax for the resident/non-resident. This will be applied regardless of whether the seller/lessor has not deducted this from their income tax returns. 

If there is a mortgage on the property being transferred, the interest that has been paid during the life of the mortgage cannot form part of the acquisition costs.

Rosana Tejada,  a consultant at Tejada Solicitors, highlights the importance of keeping all invoices related to the purchase and sale of the property, since they will be required by the Spanish Tax Authorities to check the declared capital gain.

Cost of selling a house in Spain, Rosana

Rosana Tejada – Tax Adviser

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  • Tax Reductions on Capital Gains for Tax Residents and Non-Tax Residents

If the property to be transferred was acquired in-person before 31 December 1994, the capital gains may be reduced due to the application of reduction rates regulated in the LIRPF and the IRNR – with an established reduction limit of €400,000.

The capital gains derived from the sale of properties located in Spanish territory that had been acquired from May 12, 2012, until December 31, 2012 (applicable to both residents and non-residents tax) are exempt by 50%. [LIRNR, D.A. 4ª].

  • Tax Reductions on Capital Gains for Fiscal Resident only.

In addition to the above, all taxpayers with a Spanish Residency can apply the following tax deductions:

– The capital gains obtained from the sale of a place of residence are exempt from taxation if the owners are tax-paying residents over 65 years of age

– The transfer of habitual residence for people under 65 years of age; taxpayers who obtain a profit from the sale of their permanent home do not pay income tax if they reinvest the amount obtained in a new place of residence in Spain or Europe

  • Capital Gains Tax for Fiscal Residents 

Earnings up to the first €6,000:  Tax rate = 19%.

From €6,000 euros to €50,000:  Tax rate = 21%

From €50.000 and above: Tax rate = 23%

  • Capital Gains for Non-Residents

Flat tax rate of 19% on the Capital Gains.

  • Non-Residents: 3% Withholding Retention on Selling

One of the fiscal obligations regulated by the Spanish Tax Agency to guarantee compliance with tax payments by any buyer who acquires a property in Spain from a non-resident seller. The buyer (resident or non-resident) must make a 3% withholding from the purchase price for the non-resident seller. The buyer will pay this amount to the Spanish Tax Office on form 211 in the name of the seller, as a payment on account of the taxes that the seller must pay for the presumed capital gain that it has obtained. If, after calculation, the seller has obtained an overall loss, this amount will be returned to the seller on presentation of form 210.

Examples and Possible Scenarios:

Cost of selling for Non resident
Non resident, Cost of selling
Cost of selling a house in Spain for Non resident

Sale at a Loss

It is very common that sometimes the property is sold at a loss, in this case there would be no Capital Gains as Non-Resident taxes to pay, but as non-resident taxpayers, we are obliged to submit the Form 210 within the established legal period, we must communicate through the Form 210 the losses obtained from the transfer of the property and provide the documentation that supports these losses, through this form we request the Spanish Tax Agency, the return of 3% that the buyer has made at the time of signing the public deed.

Municipal Capital Gains Tax 

It is a local tax, which taxes the increase in value of urban land subject to a transfer (known as Plusvalía Municipal)

Cost of selling

It is a tax that by law corresponds to the seller, but when the seller of the property does not reside in Spain, the purchaser (buyer) of the property becomes a substitute that is responsible for this payment. Each local council has the power to regulate its own tax rates within a scale by municipal ordinances. For the calculation, the following variables are taken into account: 

– Cadastral value of the land 

– Number of years that the property has been in the owner’s possession until its sale (the more years the tax has been paid, the higher the rate) 

Although the Municipal Capital Gain is not required in cases of property transfers where a loss is generated (the rule was declared unconstitutional) [TC 11-05-2017] . Rosana Tejada, tax advisor at Tejada Solicitors, recommends that, even if a loss exists, the transfer of the property should be notified to the Town Hall. If, later on, losses exist and the Town Hall notifies the tax assessment, we recommend that you appeal against this payment settlement to the Town Hall. 

Once the property has been sold, the seller has 30 days to pay the tax or to present the corresponding notification of the transfer made to the local council.  The council will notify the resident seller or buyer (if the buyer becomes the substitute for the non-resident seller) with a letter of payment of the projected amount. 

Estate Agent’s Fee

From our experience, we recommend choosing a real estate agency in the area where the property set to be for sale is located. This is a very valid way of advising us on the market price of the property, as the real estate agency will usually have records of other similar properties that exist in the same area.

The fees of the real estate agents will depend on the area where the property is located. They can vary between 3% and 10% on the sale price of your property. Usually, this is an expense that the seller must deal with.

We recommend that the real estate agent’s fees are paid at the end of the purchase process and never before signing the deed.

Energy Efficiency Certificate

From the 1st of June 2013, any owner who intends to sell or rent his property, needs to obtain an energy efficiency certificate which is valid for 10 years.

The energy efficiency certificate is a report issued by a competent technician, which describes the efficiency of a house in terms of energy consumption and level of CO2 emissions.  The efficiency rating ranges from most efficient energy rating, “A” to least, “G”. 

The average cost of an Energy Efficiency Certificate is €165 (this can vary from €95 – €525), dependent on location and the technician.

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    The Cost of Legal Fees for the Sale of a House

    As property conveyancing lawyers and international tax advisors, the presence of a lawyer is as important as that of a tax advisor in the sale process. With good planning, the tax advisor can save you a lot of money on taxes.

    The lawyer has the important task of checking the legal papers of the property and drawing up the private contract. Once all the checks from the due diligence investigations have been successfully completed, the lawyer will draw up a reservation contract to reserve the property and pay between €3,000 and €6,000

    Upon signing the private contract, 10% of the purchase price must be paid to the seller. With the signing of the private contract, both parties agree to fulfil the contract.

    In the event of breach of any clause of the contract by the buyers, the contract will be terminated and the seller will retain the amounts that have been paid. In the event that the sellers do not comply with their obligations, the contract will return to the buyers along with twice the amounts paid. 

    At the end of the contract, the parties and their respective lawyers will meet at the Notary’s Office, where the buyers will pay the balance to the sellers who will then hand over the keys. If, for any reason, you are unable to come to the Notary’s office for completion, your lawyer can assist you at every step of the transfer of the property with a Power of Attorney.

    Finally, the Notary will inform the Land Registry Office of the new owner of the property, and your lawyer will take the necessary steps to ensure the transfer of the property goes into your name.

    The fees of this process depend on the area and the complexity of the matter; many lawyers charge 1% of the sale price. The Tejada Solicitors Team assess their fees according to the workload and complexity of the sale – we do not set a fixed percentage, but rather choose the best option for legal advice that offers a reasonable price and a quality service. You can contact us and get more information.

    Cost Related to a Sale of a Property for a Non-Resident in Spain:

    Cost of selling a property for a Non resident

    **Note: Lawyers fees at Tejada Solicitors are priced according to workload and complexity. Please consult without obligation

    Cost of selling a house in Spain: Frequently Asked Questions

    As a seller, you will have to pay Capital Gains Tax (CGT). This amount varies depending on whether you are a tax resident of Spain or a non-resident, and the profit gained in selling your property. During the transferral of your property to the new owners, you may also have to pay Municipal Capital Gains Tax – of which local rates vary. 

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