Signing a sale does not always mean having to pay taxes on your next income tax return. In the property market, there are transactions in which the seller continues to occupy the home or the buyer cannot take possession until a future event takes place.
The Spanish Directorate General of Taxes (DGT) has clarified this scenario in binding ruling V1669‑25, dated 16 September 2025 – setting out when capital gains from sales with deferred delivery must be declared. The decisive factor is not the signing of the contract itself, but a far more relevant element: possession of the property.
When is the capital gain from the sale of a property declared?
Tax rules state that capital gains must be declared when there is a change in the taxpayer’s net worth, as set out in Article 14.1 of the Personal Income Tax Law. In property transactions, however, this change does not always coincide with the signing of the deed before a notary.
The decisive criterion is another factor: the moment the buyer acquires effective possession of the property. From a tax perspective, the existence of a contract alone is not sufficient if it is not accompanied by delivery, understood as the point at which the property is made available to the buyer.
Sale of a property with deferred delivery
The case analysed by the Spanish Directorate General of Taxes (DGT) refers to a specific scenario: a property is sold, but some of the owners continue to live there. The transaction is formalised by a public deed, and part of the purchase price is paid at that point.
However, the remaining conditions are deferred until the occupants vacate the property – either by moving to a care home or upon their death. Until then, the buyer cannot take possession or make use of the home. This situation raises a key tax question: if the deed has already been signed, is the seller required to declare the capital gain in that same tax year?
Calculating capital gains on the sale of a property
Before addressing when the capital gains should be paid, it is important to understand how they are calculated. Article 33 of the Personal Income Tax Law states that a capital gain or loss arises when there is a change in the value of a taxpayer’s assets.
In property sales, the gain is calculated by deducting the acquisition value from the transfer value. The transfer value is the actual sale price – provided it is not lower than market value – minus any expenses and taxes paid by the seller. The acquisition value includes the original purchase price, the cost of improvements made to the property and any related expenses and taxes, adjusted to reflect any depreciation claimed during periods in which the property was rented.
Up to this point, the calculation follows standard rules. What ultimately matters is not when the price is paid, but when the change in net worth occurs that triggers the obligation to declare the capital gain.
Delivery of the property and public deed: what the Civil Code says
To resolve this issue, the Tax Authority refers to Article 1462 of the Civil Code, which regulates when goods are deemed to be delivered in a sale. As a general rule, the execution of a public deed is considered equivalent to delivery.
However, this principle has important nuances. If the contract explicitly states that possession is not transferred at that moment, this equivalence no longer applies. In other words, the signing of the deed alone does not always determine when the transaction must be taxed for personal income tax purposes.
Title and mode theory: why signing does not always imply transferring the property
This approach is consistent with the Supreme Court's doctrine, which applies the theory of title and mode, rooted in Roman law. Under this principle, ownership is transferred only when two elements coincide: title, meaning the contract, and mode, understood as delivery of the asset.
In real estate transactions, delivery can take several forms – most commonly through the execution of a public deed – unless the parties expressly agree otherwise. Where the contract states that the seller retains possession, it may be concluded that delivery has not yet taken place. In such cases, ownership is not considered transferred, despite the formal signing of the deed.
When is the sale of a property with deferred delivery taxed?
In the case analysed, the contract is structured so that delivery of the property is deferred and subject to specific conditions. The seller retains possession until the outstanding balance of the purchase price is paid, a payment that depends on the occupants' vacating the property. As a result, transfer of possession is postponed to a future date.
The conclusion reached by the Directorate General of Taxes is clear: where the deed expressly states that delivery is not immediate, the seller is not required to declare the capital gain in personal income tax for the year in which the deed is signed. Instead, the gain must be declared in the tax year in which delivery actually takes place – that is, when the buyer is finally able to take possession of the property.
