If you don’t know what you’re doing, selling a house in Spain might be a difficult procedure. If you make the decision to sell your home, the following information will allow you to prevent unpleasant last-minute shocks.
As a non-resident selling a home in Spain, here are the taxes you’ll have to pay:
Plusvalía.
The Ayuntamiento (local council) collects a municipal tax based on the rise in the land’s official valuation between the time the property was purchased and the time it was sold.
To determine the rise in property value, we use the catastral value of the house at the time of sale as a starting point (this is a value stated on the Rates bill issued by the local Town Hall). The yearly rate established by the local municipal council is multiplied by the number of years you’ve owned the property to arrive at the final figure. As a result, the length of time you’ve had the Plusvalia has the greatest impact on its current market worth.
The Spanish Government ultimately enacted a decree on November 8th, 2021, making significant modifications to how this tax is computed after many Spanish Court Decisions found it is not legitimate.
- Plusvalia will not be paid if the sale price in the title deed is lower than the purchase price in the purchase agreement.
- To reduce the Plusvalia tax, taxpayers might use a different method that considers the purchase and selling prices and profit.
Capital Gains Tax (CGT)
In contrast to the plusvalia, this tax is more equitable because it is only based on earned real profit. Profits made by non-residents in Spain are taxed at 19 percent. Non-residents must keep 3% of the sale price even if they don’t profit from selling their property. Of course, there are special exceptions to this rule where you have no tax obligation since you will lose with the sale or your tax burden is smaller than the 3% kept. However, please keep in mind that: 1) the IRS will take anywhere from six to ten months to provide the refund, and 2) the IRS will verify that you have been paying your Non-Resident Income Tax before issuing the refund.
You should be aware that the tax rate is not 3% plus 19% of the earnings. When it comes to taxes, it’s only the latter that counts.
Let’s have a look at the COSTS presently:
Broker’s commission:
Most real estate brokers like charge 4% to 6% plus IVA. This will be removed from the sale price; therefore, no advance payment is required – If you market online through online agents most charge a one off fee upfront and no commission on sale which can save you thousands. You choose the best option for you.
Lawyer’s bill:
Most attorneys in Spain charge a standard fee of 1 percent Plus IVA on the sale price of a property for their services during the full process of selling a property, and most of them have minimums and maximums. When the sale price is high, certain law firms, like ours, offer lower prices. It’s a good idea to consult with a lawyer as early in the process as possible. They’ll let you know exactly how much they charge and provide you with important details like taxes.
Energy Performance Certificate:
Since 2013 in Spain, this requirement must be satisfied before putting your home on the market. Without this Certificate, you might be penalised if you put your home on the market for sale or long-term rental. A one-bedroom apartment costs between 80 and 180 Euros, while a villa costs 180 and 300 Euros. This is something that your real estate agent can take care of for you.
Costs associated with the termination of a mortgage:
When you paid off your mortgage years ago, you still need to check with the Property Registry to see if the charge has been removed. An estimated 800,00 Euros will cover the costs of notary and land registry services. Be aware that even if your mortgage has been repaid, you still need to remove the charge from your property’s Land Registry. If you do not notify the bank, it will not be done.
Contact us today to advertise market and sell your property in Spain internationally.
