Selling a house in Spain doesn't just involve finding a buyer and closing the deal; it also entails a series of taxes that must be paid. In this article, we explain which taxes may apply when selling a house, and which aspects should be taken into account to avoid surprises at the end of the transaction.
When you decide to sell a property in Spain, you must consider not only the sale price but also the taxes you must pay for selling a house. These taxes vary depending on various factors, such as the profit obtained from the sale, the location of the property, and local legislation. Below, we review the main taxes that may apply when selling a house.
There are several types of taxes to keep in mind when selling a property. The most common are the Personal Income Tax (IRPF) and the Tax on the Increase in Value of Urban Land (Municipal Plusvalía).
One of the most important taxes for selling a house is the IRPF. This tax levies the profit obtained from the sale of the property. The gain is calculated as the difference between the sale price and the acquisition price, adjusted for expenses associated with the sale (notary, registry, management fees, etc.).
This tax levies the profit obtained from the sale. If a gain is made, it is taxed at a progressive tax rate ranging between 19% and 30%, depending on the amount of said gain.
IRPF brackets for the savings base in Spain
|
Capital gain / savings base |
Applicable rate |
|
Up to €6,000 |
19% |
|
From €6,000 to €50,000 |
21% |
|
From €50,000 to €200,000 |
23% |
|
From €200,000 to €300,000 |
27% |
|
More than €300,000 |
30% |
When calculating the capital gain on which IRPF is applied, the purchase price is not compared directly with the sale price. Regulations allow for certain expenses and investments to be taken into account which can reduce the capital gain and, therefore, the tax to be paid.
Deductible expenses from the acquisition price (added to the original purchase value):
In this section, it is worth clarifying that if the property has been rented out, the calculation of the capital gain may change. During the years of rental, tax regulations allow for a depreciation deduction for the wear and tear of the building. When selling, the Tax Agency requires reducing the acquisition value by the tax-deductible depreciation, even if the owner did not correctly deduct them in their tax return. This can increase the capital gain and, therefore, the tax to be paid. For this reason, for properties that have been rented out, it is advisable to review the calculation with a tax advisor.
Deductible expenses from the sale price (subtracted from the transmission value):
Keeping all invoices and receipts is essential: in the event of an inspection, the Tax Agency will demand documentation proving each deducted expense.
In Spain, there are cases where you may be exempt from paying IRPF for the sale of a home, or at least benefit from tax exemptions:
In any case, it is important to consult a tax expert to know all the details and benefits available according to your situation.
If you acquired your home before December 31, 1994, you may be able to benefit from so-called abatement coefficients, which reduce the taxable capital gain. This peculiarity is especially relevant in areas like the Costa Brava, where family properties acquired or built decades ago abound.
The reduction coefficient applies to the part of the gain generated up to and including January 19, 2006, and entails a reduction of 11.11% for each year of ownership prior to December 31, 1994 (not counting the first two years). In certain cases, homes acquired very long ago can benefit from a very significant reduction in the part of the gain generated up to January 19, 2006, although the calculation must be done case by case.
Important limitation: this tax benefit only applies to the first €400,000 of transmission value accumulated by a taxpayer throughout their life. Once that threshold is exceeded, the rest is taxed without reduction.
The municipal plusvalía tax is another of the taxes to pay when selling a house in Spain. This tax is local and applies to the increase in the value of urban land from the time it was acquired until it is sold. The taxable base is calculated based on the cadastral value of the land and the number of years it has been owned.
Currently, if the seller proves that there has been no increase in the value of the land between acquisition and transfer, the operation is not subject to municipal plusvalía. Furthermore, if the real increase is lower than the result of the municipal objective calculation, it can be requested that the real increase be taken as the taxable base.
The tax rate varies by municipality, though it cannot exceed 30%, so it is important to consult local regulations to know the exact percentage.
In a sale, the IRPF or IRNR corresponds to the seller. The municipal plusvalía also generally corresponds to the seller in a sale transaction. In free transfers, such as inheritances or donations, the taxpayer may be different. The parties can internally agree on another distribution of expenses, but that agreement does not change who the taxpayer is before the Administration.
If the seller of the home is not a tax resident in Spain, the transaction is taxed via the Non-Resident Income Tax (IRNR) and not IRPF. This is common in the Costa Brava, where a significant portion of owners are non-residents with a second home.
In transactions with a non-resident seller, the buyer is obliged to retain 3% of the sale price and pay it to the Tax Agency using Form 211 within one month of signing the deed. This 3% acts as a payment on account of the IRNR that the seller will have to settle.
Once the retention has been applied, the non-resident seller must file Form 210 to settle the final tax. On the sale of a property located in Spain, the capital gain is generally taxed under IRNR at 19%. The 3% retention made by the buyer is deducted from the final fee. If the retention exceeds the final tax, the seller can request a refund of the excess.
Generally, non-resident sellers cannot apply the exemption provided in IRPF for those over 65 for the sale of the primary residence, as they are taxed under IRNR and not IRPF. However, they can apply for the reinvestment exemption for primary residence if the new home is acquired in an EU or EEA member state with effective exchange of tax information.
The total amount to be paid in taxes depends on several factors, such as the profit obtained in the sale, the cadastral value of the land, and the location of the property. Here is a general idea:
To obtain an exact calculation, it is recommended to consult a tax advisor or the local town hall.
Meeting deadlines is essential to avoid surcharges, late payment interest, and penalties. These are the main deadlines to keep in mind:
IRPF (residents in Spain): capital gains are declared in the income tax return for the year following the sale, within the ordinary period (usually between April and June).
Municipal plusvalía: the seller has 30 business days from the signing of the deed to self-assess the tax at the corresponding town hall. In inheritances, the period is extended to 6 months, extendable up to one year if requested within the period.
Form 211 (3% retention for purchase from a non-resident): the buyer must pay the retention within one month of the date of the transaction.
Form 210 (IRNR for non-residents): the non-resident seller must file the settlement within three months once the one-month period from the transmission date has passed. In practice, this is approximately four months after the sale.
