Most non-residents are vaguely aware that on selling property in Spain, a buyer practices a 3% retention on the sale proceeds which is paid directly to the Spanish Tax Office. But often they tend to forget about it post-completion.
Unbeknownst to scores of sellers they may in fact be entitled to a tax rebate on the full 3%, or a part thereof. This tax rebate does not apply automatically, so you will need to instruct a lawyer to do it on your behalf who will proactively seek it. It takes on average under 6 months. However, in the rare event it takes longer than a year, legal interests are paid on top by the tax office (for 2021, it’s 3%). You get paid more for the delay than what any high street bank returns on savings nowadays.
Often, we come across sellers who are completely oblivious to the fact they are entitled to claim a tax rebate. To be eligible, you simply need to owe in cgt less money than the 3% withheld by the tax office. Surprisingly, this in fact is much easier to achieve than it sounds. And the reason is simple, you can legally offset a large amount of expenses and taxes on selling property in Spain which dramatically lowers your cgt tax liability (see referenced taxation article below).
This translates into sellers actually ‘overpaying’ Spanish Tax Authorities by means of the compulsory 3% withheld at completion. Which in turn means they are entitled to a sizeable tax rebate. No one will give you the heads up on it, and the Spanish government is relying that (most) non-resident sellers will simply forget about it.
To close, this tax rebate is time-gated (4 years). If you neglect to apply for it in time, you lose your chance. Come and speak to us if you’ve sold your house in Spain over the past five years, we can make it happen. We act nationwide.
- Further reading at idealista: How to pay less tax on selling property in Spain – 15th March 2021
At LNA we can assist you buying, selling or renting out your property in Spain. We have 18 years’ experience in conveyance & tax. We are also specialized in immigration & residency visas.
Larraín Nesbitt Abogados, small on fees, big on service.
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