Although selling a property is not as complicated as purchasing one, there are several items that any vendor has to take into account when selling his Spanish property so it his highly advised to have a solicitor that will guide you in the sale procedure and will ensure that all legalities are in place.
First of all it is very important to know if the vendor is Fiscal Resident in Spain or not, as Non Resident have special retentions to take into consideration (Plusvalía, 3%). It is important to know that to be classified as Fiscal Resident, just having the residence certificate (the “green card”) or the TIE card is NOT enough, it is compulsory to be registered as FISCAL RESIDENT and have the proper Certificate of Fiscal Residency issued by the Tax authorities.
On another hand, the vendor has the obligation to supply on completion specific documents:
- The energy Performance Certificate
- The Cedula / Second Habitation Certificate or the “Declaration Responsible”
- The certificate of the Community of Owners
- Confirmation of the situation of utilities / local rates
Also, as vendor, you face the payment of 2 taxes:
- The Plusvalía or IIVTNU. This is a special tax paid to the council where the house is located. It is calculated taking in consideration the number of years of ownership and the cadastral value of the land where the property is built. Since some years it is possible to claim the devolution of the Plusvalía if you sell the house with a loss
- The Capital Gain Tax (CGT): The Capital Gain tax is paid upon the PROFIT earned on the sale of the property. So if there is no profit, you do not pay any CGT
The tax implications are different depending on if you are classified as Resident or not
If you are NON RESIDENT
In relation to the Plusvalía, your buyer will hold on completion the necessary amount to cover its payment, as by law he has the obligation to pay it in the event that the vendor does not pay it.
In relation to the CGT, the buyer will hold a 3% of the sale price and will deposit it at the tax office on behalf of the vendor to cover his POSSIBLE CGT. The vendor must then calculate the REAL CGT (19% on the PROFIT) and can claim the devolution of the difference (if the 3% held is lower than the REAL CGT) or pay the difference (if it is higher). In order to be able to receive this devolution, the vendor must be UP TO DATE in the payment of his non-resident taxes.
If you are RESIDENT
In relation to the Plusvalía, you must notify the council that the sale took place and pay there the Plusvalía tax. In this case the buyer will not be affected if it is not paid.
In relation to the CGT, it must be declared in the following year’s income Tax, and the gain or loss will be added to your rest of incomes. If you have a loss, it can be compensated with future gains (limited to the following 5 years). On the other hand, if you have a gain, you can study to reinvest the money of the sale to avid the payment of CGT (the tax exemption reinvestment has several conditions to be applicable so it is always better to consult with your solicitor if you will be able to apply it) .
Finally there are other bits and pieces to be taken into account when selling your property in Spain:
- Cancelation of mortgages
- Cancelation of Embargos
- Actualization of owners due to a previous inheritance
- Declaration of new constructions at the property (Swimming pools, extra rooms, storage rooms, etc…)
- Coordinating the description of the property between Cadastre and Registry
If you’re looking to sell your property located in Spain, as you can see, there are many factors to know about and a lot of math to do! Even though this process could be very confusing, our team at MAM Solicitors will help you along the way. The firm is served by an integrated team of qualified solicitors, registered lawyers and members of the Bar Association, supported by expert, multilingual administrative staff. We are a multicultural organisation, where English, Dutch, French and Norwegian languages are spoken fluently. Whether you are buying a house in Spain, or selling it, or you are looking for fiscal representation in Spain, we are the right firm for you. MAM covers the Costa Blanca and Costa Cálida regions, with three branches located at San Javier (Murcia), Orihuela Costa (Alicante) and Vera (Almería).
All branches strive to offer the same, efficient and meticulous support to our many clients.