SELLING A PROPERTY IN SPAIN
This quick check list is aimed at providing some basic information about selling
in Spain and tries to answer most of the common questions that we are asked.
1. ADVERTISING THE PROPERTY IN SPAIN
When listing your property, especially in popular tourist destinations like the
Costa del Sol, Mallorca or Canary Islands, highlight unique features that appeal
to both local and international buyers. Every region often has specific
regulations and tax considerations that may affect the sale process.
The first step is to know what’s going on around you so you can get a realistic
idea of the price your property could sell for. Factors to consider are price per
square foot and what neighbouring properties sold for. This will help you to
know the price you can hope to get for your property.
There are many benefits to finding English-speaking estate agents, as they will
be able to provide you with useful knowledge of the local property market. They
will also likely have lots of prior experience of working with international buyers.
2. SEEKING LEGAL ADVICE TO SELL A PROPERTY
It is highly advised to have a solicitor that will guide you in the sale procedure
and will ensure that all legalities are in place. A solicitor can also provide you
with invaluable legal advice and oversee the legal and administrative aspects of
the sale, specially the tax implications of the sale.
3. GATHER ALL THE NECESSARY PAPERWORK
The legal process for selling a property in Spain requires presenting plenty of
documents, including an energy efficiency certificate, the technical inspection
certificate, the mortgage certificate, the property title deeds, local taxes receipts,
utility bills, etc.
In compliance with European directives on energy and environmental issues,
the owners of existing homes must provide potential buyers with the property’s
energy performance certificate, which must be issued by a qualified
professional.
4. COSTS OF SELLING A PROPERTY IN SPAIN
Like elsewhere, buying and selling a property comes with a number of costs.
There are two tax payments that you’ll want to bear in mind.
The first is Capital Gains Tax .If you are selling the property at a higher cost
than what you initially paid, Capital Gains Tax is essentially the tax you pay on
the profit you make on the sale of the property. You can deduct the estate agent
commission and other costs before you determine the final CGT rate. The CGT
rate depends on the amount of the gain.
If you don’t have official residency status in Spain, there are some special
conditions to satisfy. The buyer will have to pay 3% of the final purchase
price to the Tax Authorities that will offset any of the Capital Gains Tax you
have to pay. When an equity loss occurs or when the amount of the withholding
is greater than the amount the seller has to pay in Capital Gains Tax, a refund
can be requested by submitting a specific form for this purpose to the Spanish
Tax Office. Nevertheless, for the Tax Authorities to authorise a refund, the
taxpayers must have submitted their annual income returns as a non-resident
and be up-to-date with all payments.
The second is Plusvalía Tax, which is a local tax. This local municipal tax
calculates the value of the land from the time you bought the property until
when you are selling. The seller is usually responsible for this tax.
Currently, no “Plusvalia Tax” is generated when the sale of a property generates
no profit, this being understood as the selling value (price) being equal to or less
than the purchase value at the time, without taking into account taxes and
deductible expenses.
The Royal Decree-Law which regulates this tax establishes two methods for
calculating the tax base, with the taxpayer being able to choose the one that
suits them best.
Objective Method: The cadastre value of the property will be multiplied by
coefficients that are established each year and that will evolve according to the
real estate market.
Real Method: The difference between the selling price and the purchase price
of the property is calculated and the percentage of the cadastre value
corresponding to the value of the land is applied to this difference.