Selling Costs Made Simple

There are a costs and taxes that have to be taken into account when selling a property in Spain, and these can vary depending on where the property is located and the local town hall policies.

Capital gains tax (CGT)

Calculated much the same as most European countries, where you pay tax on any gain made on a property sale, so basically the difference between the buying and selling price. If renovations and improvements have been made then these can offset the tax due PROVIDING THERE IS A VALID INVOICE WITH TAX AND VAT NUMBERS.

Tax due on this amount is on a sliding scale as follows

19%  for first 6000 euros

21% 6000 to 50,000 euros

23% 50,000 euros upwards

Plusvalia land tax

Based on the Cadastral value of the property and paid when a property or land is sold or there is a change in ownership.
Not a simple tax to work out, and there is a % coefficient applied which depends on land values and the number of years the property has been owned. These can vary depending on areas, but in general you will be charged approximately 3% Plusvalia tax

Estate Agency fees
These can vary between 1 and 5 % and this fee is subject to 21% IVA ( VAT )

General guide line
This page will hopefully explain in more detail, and as previously mentioned, these costs can vary, but an easy calculation of selling costs are anywhere between 3% and 9% which will take into account tax retentions, estate agency fees, required paperwork and legal costs.

( please note that this cost can increase if there are outstanding planning or legal issues with your property )

Understanding Spanish taxes is vital when relocating to Spain, taxes play a significant role in any country’s economy, and Spain is no exception. As a resident or investor in Spain, understanding the Spanish tax system is crucial to ensure compliance and make informed financial decisions. This guide provides an overview to understanding Spanish taxes and key information to help navigate the Spanish tax landscape.

Income Tax (Impuesto sobre la Renta de las Personas Físicas – IRPF):

The IRPF is the personal income tax in Spain and applies to individuals residing in Spain. It is a progressive tax with varying tax rates based on income levels. Resident individuals are subject to tax on their worldwide income, while non-residents are taxed only on their Spanish-source income. The tax is calculated using tax brackets, deductions, and allowances, which can vary depending on factors such as marital status, family situation, and age.

Wealth Tax (Impuesto sobre el Patrimonio):

The Wealth Tax is an annual tax on the net wealth of individuals. It applies to residents and non-residents who own assets in Spain exceeding a certain threshold. The tax rates are progressive, and various deductions and exemptions may apply.

Value Added Tax (Impuesto sobre el Valor Añadido – IVA):

The IVA is a consumption tax similar to the Goods and Services Tax (GST) or Value Added Tax (VAT) in other countries. It is applied to most goods and services, including imports and exports. The standard IVA rate in Spain is 21%, although reduced rates of 10% and 4% may apply to specific goods and services.

Corporate Tax (Impuesto sobre Sociedades):

The Corporate Tax applies to companies and entities operating in Spain. It is levied on their worldwide income, subject to certain exceptions and deductions. The standard corporate tax rate is 25% for most companies, although reduced rates may apply to small and medium-sized enterprises (SMEs) and certain regions or industries.

Capital Gains Tax (Impuesto sobre las Ganancias Patrimoniales):

The Capital Gains Tax applies to the sale or transfer of assets such as real estate, stocks, and other investments that result in a capital gain. The tax rate varies depending on the type of asset and the length of ownership. For individuals, the rates range from 19% to 23%, while for companies, the rate is generally 25%.

Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones):

The Inheritance and Gift Tax is levied on the transfer of assets through inheritance or gifts. The tax rates and exemptions can vary significantly between regions in Spain, as this tax is administered autonomously by each region. It is essential to consult the specific regulations of the region where the transfer occurs.

Other Taxes:

Spain has various other taxes, including property tax (Impuesto sobre Bienes Inmuebles – IBI), local taxes, vehicle tax (Impuesto sobre Vehículos de Tracción Mecánica – IVTM), and taxes on specific activities or industries. These taxes are managed at the local or regional level and can vary depending on the municipality or region where the activity takes place.

Tax Residency and Obligations:

Understanding your tax residency status is vital in determining which taxes you are subject to in Spain. Generally, individuals are considered tax residents if they spend more than 183 days per year in Spain or if their primary economic interests are in Spain. Tax residents are obligated to file tax returns and report their worldwide income, while non-residents only need to report their Spanish-source income.

Tax Advisors and Compliance:

Given the complexity of the Spanish tax system, seeking advice from a qualified tax advisor is highly recommended. They can help ensure compliance with tax regulations, optimize your tax situation, and assist with tax planning strategies. It is important to maintain accurate records, including receipts, invoices, and documentation related to income, expenses, and assets, to support your tax filings.

Staying Informed and Updated:

The Spanish tax system is subject to changes and updates, so it’s crucial to stay informed about any modifications in tax laws, rates, and obligations. The Spanish tax agency (Agencia Tributaria) provides official information and resources, while professional tax advisors and specialized publications can offer valuable insights into the evolving tax landscape.

Navigating the Spanish tax system requires a solid understanding of the various taxes, obligations, and compliance requirements. By familiarizing yourself with the basics outlined in this guide and seeking professional advice when needed, you can ensure compliance and make informed financial decisions in Spain.

If you’re considering selling your property in Javea, it’s essential to be well-prepared and gather all the necessary documents to ensure a smooth and successful transaction. Selling a property involves a significant amount of paperwork, and having the right documents in order will help facilitate the process. Here is a comprehensive guide to the essential documents you will need when selling your property in Spain.

Title Deed (Escritura de Compraventa):

The Title Deed is the most crucial document as it establishes your ownership of the property. This document proves that you are the legal owner and have the right to sell the property. It contains important information such as the property’s description, boundaries, and details of the previous purchase. Ensure that you have a valid and updated copy of the Title Deed.

Land Registry Extract (Nota Simple Informativa):

Obtaining a Land Registry Extract is necessary to confirm the property’s registration status and details. It provides information on the property’s boundaries, ownership history, any outstanding mortgages or charges, and any limitations or encumbrances on the property.

Identification Documents:

Both the buyer and seller must provide identification documents, such as a valid passport or national ID card. These documents are required to verify the identities of the parties involved in the transaction.

Energy Performance Certificate (Certificado de Eficiencia Energética):

An Energy Performance Certificate is mandatory for selling a property in Spain. It assesses the property’s energy efficiency and provides information on energy consumption and emissions. The certificate must be obtained from a qualified technician registered with the relevant regional authority.

Property Tax Receipts (Impuesto sobre Bienes Inmuebles – IBI):

Ensure that you have the latest property tax receipts, also known as IBI receipts, to prove that all property taxes have been paid up to date. This document confirms that you are in good standing with your local municipality regarding property taxes.

Community Fees Receipts:

If your property is part of a community or homeowners association, gather receipts or proof of payment for any outstanding or current community fees. Buyers will want to ensure that there are no unpaid fees or disputes associated with the property.

Building License and Planning Permissions:

If you have made any modifications, renovations, or extensions to the property, it’s crucial to have the necessary building license and planning permissions. These documents ensure that the changes made to the property comply with local regulations and were approved by the relevant authorities.

Habitation Certificate (Cédula de Habitabilidad):

A Habitation Certificate is required for the sale of a residential property. It certifies that the property meets minimum habitability and safety standards. It is particularly important when selling a property that is newly constructed or has undergone significant renovations.

Mortgage Information:

If your property has an outstanding mortgage, you need to gather all relevant mortgage documentation, including the loan agreement, amortization schedule, and details of the outstanding balance. It is crucial to inform the buyer of the existing mortgage and work with them to coordinate the necessary steps for its cancellation or transfer.

Notarised Power of Attorney (if applicable):

If you are unable to attend the completion process in person, you may need to grant a Power of Attorney to a trusted representative who can act on your behalf. This document should be notarized and grant specific powers related to the sale of the property.

It’s important to note that this list of documents may vary depending on specific circumstances, property type, and location. Working with a qualified real estate professional or a lawyer experienced in Spanish property transactions is highly recommended. They can guide you through the process, ensure that you have all the necessary documents, and assist in preparing the required paperwork for a smooth property sale in Spain.