Taxes on selling property in Spain

¿Cómo saber el valor fiscal de un inmueble?

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Larraín Nesbitt Abogados

11 December 2024, 9:00

Today’s article mirrors our published article Taxes on buying property in Spain.

Sellers in Spain are liable for two taxes:

1. Capital Gains Tax (CGT, for short), and

2. Plusvalia Tax

Capital Gains Tax

This tax is paid to the central government, to the Spanish Tax Office.

CGT is taxed on the profit of selling property.

E.E.A. and EU-resident: 19%
Rest of the world: 24%

Profit is defined as the difference between what you paid for a property and what you sell it for (less all improvements made to the property over the years as well as the expenses borne on acquiring the property, including taxes).

Non-residents in Spain have a 3% retention practised by a buyer on account of a seller’s CGT tax liability. This 3% is paid by the buyer to the Spanish Tax Office.

Depending on whether a seller makes a profit, or not, he may be entitled to a tax rebate on the 3% or part of it:

Seller breaks even or sells at a loss: entitled to a full 3% tax rebate
Seller makes a profit on selling: must pay CGT (the 3% withheld by the buyer goes towards what he must pay to the Spanish Tax Office).

CGT can be greatly mitigated by a lawyer on selling or gifting property. For reference, our taxation articles:

A lawyer can greatly mitigate your tax bill on selling; in fact, so much so, that you may even qualify for a full tax rebate on the 3% withheld by the buyer. The tax rebate procedure is explained in detail in our taxation article: Did you know most non-resident sellers are entitled to a tax rebate on the 3% retention?

If done right, and all expenses and taxes are properly offset, the actual CGT on selling is closer to 5 – 7% on the profit. The tax mitigation procedure is technical and can only be done by a lawyer.

We offer a 3% tax rebate service for a competitive fee. In 3 months, you get refunded the 3% retention plus legal interest on top (if refunded belatedly).

Plusvalia Tax

This is a tax a seller pays to the town hall where his property is located. The town hall calculates the applicable tax following a sliding scale. We explain in detail in our taxation article: New Spanish Plusvalia tax on property explained.

Some town halls are notoriously slow and send their tax invoice very late; often exceeding a year. Buyers normally practice a retention on the sale price at completion. Meaning the buyer, or his legal representative, will pay for the seller’s tax using part of the sales price.

The reason on why a retention is practised by the buyer, is because if the seller walks away after completion without paying said tax, the buyer becomes legally liable for it.

Unlike in other countries, the golden rule in Spain is that all debts and arrears follow the property. So, whoever becomes the new owner ‘inherits’ all previous debts and taxes. This is one of many reasons why it is strongly recommended non-residents instruct a lawyer on buying or selling property in Spain to avoid tax and legal problems (your conveyance lawyer will run due diligence on the title).

LNA offers a competitive conveyance service on buying or selling property in Spain (we act nationwide):

At Larrain Nesbitt Abogados (LNA) we have over 21 years of experience specializing in taxation, and property conveyance. We also assist clients with immigration & residency visas and inheritance procedures (probate). You can contact us by e-mail at info@larrainnesbitt.com, by telephone on our UK line (+44) 0754 3838 218 or Spanish line (+34) 952 19 22 88, or by completing our contact form.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Ní neart go cur le chéile. VOV.