Capital gains tax in Spain
Capital gains tax in Spain: When selling a property in Spain, you will need to pay 2 taxes. We give you a general basic explanation:
Municipal Capital Gains Tax
Capital gains tax in Spain throught the municipality: also called the “plusvalía municipal”. This is a tax that will be levied by the municipality where the property is located. We will calculate this for you in advance so that you have an idea of the cost. This is based on the value of the land and the number of years that you have owned it. A second calculation will be done on the real values, and whichever is the most advantageaous for you, we will use and apply.
National capital gains tax, also known as the 3% tax. When you sell the property, you will pay a tax on the NET capital gain you have realized. This means that the difference between:
- The purchase price you paid at the time plus all legal costs associated with your purchase, such as notary fees, registration fees, transfer tax and your conveyancing costs by a consultant/lawyer/solicitor such as us.
- The sales price you now receive minus all deductible legal costs associated with the sale such as our invoice, the energy performance certificate, the municipal capital gains tax described above and the broker’s invoice.
On this difference, if it is positive (so you made a profit on the sale) you will be taxed at a rate of 19%. At the notary, however, you will already have to pay 3% of the total sales price to the tax authorities. The difference between these two will have to be settled. In other words:
- Either you have paid too much tax at the notary (the 3% on the total sale price is higher than what you actually should have paid) and then we will ensure that the Spanish tax authorities refund the overpaid amount to you;
- Either you have paid too little at the notary (the 3% that was deducted from the sale is not enough) and so we will have to submit an extra declaration and still have to pay this difference. ATTENTION!! You can only claim a refund of the overpaid tax if you have correctly submitted and paid your annual non-resident tax! The tax authorities will check this before proceeding with a possible refund of your taxes.
Don’t let this discourage you, we do a calculation in advance so that you know what to expect and how much (or how little) you have to pay on the sale of your property to the Spanish tax authorities.
Capital Gains Tax: to finalize
It goes without saying that if assist you with your sale, we will calculate these taxes for you in advance and inform you of them. And of course filing and settle these with the competent authorities.
We also offer to do the necessary for you, after you have already sold and only want to use our services for the filing of the national capital gains tax. As explained earlier, it must be submitted and settled within 4 months of the sale. We are happy to assist you with this!