50% reduction in capital gains tax
Both residents and non-fiscal residents can take advantage of a 50% reduction in Capital Gains Tax when selling a property in Spain that was acquired between May 12, 2012, and December 31, 2012.
Reductions for purchases made before 1995
A transitional tax regime can be applied to the transfer of assets or rights that were initially acquired before December 31, 1994. According to this regime, proportional reductions (14.28%, 25%, or 11.11% annually, depending on the type of assets) can be applied to the capital gains generated from the date of acquisition until January 19, 2006, for each year of ownership of the assets or rights between the acquisition date and December 31, 1996.
With effect from January 1, 2015, this transitional taxation regime applies when the value of the transfer does not exceed 400,000 euros per taxpayer. For this purpose, the values of the transfer of all assets transmitted from January 1, 2015, on which this transitional regime can be applied, should be added together. If the total amount exceeds the threshold, the transitional regime is applied proportionally to the part of the transfer value that does not exceed the threshold.
Exemption for Reinvestment When Selling Your Primary Residence Abroad
In accordance with tax consultation V2910-21 published on November 18, 2021, when an expatriate who maintains a residence abroad establishes tax residency in Spain for the current tax year (the calendar year in Spain), any capital gains resulting from the sale of a property is exempt from Spanish taxation. This exemption is granted under the condition that your primary residence is located outside of Spain and you purchase a new home there (effectively reinvesting) at the time of the property transfer or within the subsequent two years.
Rosana Tejada, a tax advisor at Tejada Solicitors Law, emphasizes that the Spanish tax agency will scrutinize this exemption. To maximize your tax savings, Rosana recommends careful planning and strict adherence to all the regulations for standard tax procedures. If you would like to learn more about this exemption, please click here.