How to Save Taxes When Selling Your Property in Spain

Property in Spain

Taxes on Spanish property are notorious high – those when you buy can be as much as 12% of the purchase price and capital gains tax can send them soaring when you sell. It’s therefore useful to know how to save money on real estate transactions. In this article, we look at how to save taxes when selling your property in Spain.

What Taxes Do You Pay When You Sell Property in Spain?

But before we turn to ways to save taxes, lets start by listing the main taxes and fees incurred when you sell property in Spain.

Plus Valía Tax

Plus Valía tax (meaning ‘extra value’) is levied by the local council on the change in value of the property since you bought it. It is calculated based on the cadastral value of the property and takes several factors into consideration including:

The length of time you have owned a property – the longer your ownership, the higher the tax.

The size of the property – large properties pay more than smaller ones.

The property’s location within the municipality – properties in areas with more municipal services and facilities attract higher levels of plus valía tax.   

Plus valía tax is calculated up to the day you sell. Enquire at the council or ask your lawyer to find out how much the tax will be. If the property is large and you’ve owned it for several years, the bill could be several thousand euros.

Capital Gains Tax

As is the case in most countries, Spain levies capital gains tax (CGT) on the profit made from the sale of assets including real estate. Its rate ranges from 19% for Spanish and EEA residents to 24% for non-EEA residents.

Find out about buying and selling property in Spain. 

Real Estate Agency Fees

If you choose to use the services of a real estate agency to sell your property, you will have to pay their fees. These are usually 5% of the purchase price.

Legal and Other Fees

It’s always advisable to use a lawyer experienced in real estate when you sell a property in Spain. Fees are usually 1% of the purchase price.

As the vendor, you are not liable for notary or land registry fees.

Selling your home in Spain now? Find out how to avoid these mistakes.

How to Save Taxes When Selling Your Property in Spain

Unfortunately, the taxes listed above are unavoidable so it’s impossible not to pay taxes when you sell your property. In fact, there are no ways of saving on plus valía tax. However, take professional advice when your council levies the tax to find out if it has been applied fairly and using the right criteria.

Saving on capital gains tax on Spain

The good news is that there are ways of saving on CGT or at the very least, bringing down the cost of the tax.

Exemptions from CGT

The best saving of all is, obviously, paying no tax. You are exempt from CGT in the following circumstances:

  • If you are 65 or over, tax resident in Spain and selling your home that you have lived in for at least the last three years.
  • If you are tax resident in Spain, selling your home that you have lived in for at least the last three years and reinvest all the profit in your next home (in Spain or the EEA). You must reinvest the profit within two years of selling the property.

Did you know? You are only Spanish tax resident if you are registered with the Spanish tax authorities and have a certificate to prove it. A Spanish residence permit is not proof of your tax residency. Find out about tax representation in Spain

Savings on CGT

If you don’t qualify for exemption from CGT, it’s worth doing all you can to bring down the bill. One of the best ways to do this is to include expenses you have incurred during ownership, for example:

  • All fees and taxes associated with the purchase, e.g. legal, notary and land registry fees; property taxes.
  • All fees and taxes associated with the sale, e.g. real estate and legal fees, the costs of documentation such as the energy efficiency certificate or Community of Owners certificate.
  • All home refurbishments and improvements you carried out while you owned the property such as an extension, new kitchen, swimming pool etc. Note that maintenance costs do not count.

Did you know? The above expenses are only valid if you have an official invoice (including VAT) for the service.

Get Expert Help

The only guaranteed way to ensure that you make all possible savings on taxes when selling your property in Spain is to use professional services for conveyancing and taxes. The expert team at Costaluz Lawyers provides both and we’d be only too happy to help you pay less. Get in touch for a free consultation now.

12 thoughts on “How to Save Taxes When Selling Your Property in Spain”

  1. Hi there I’ve just sold my house in spain and I lost alot of money because of the estate agent she told me I have to pay taxes and when I sold my property they took €9000 I don’t know why so much but I was told I could claim it back as long I’m up to date with paying taxes every year and they will deduct it and they will refund it to my bank account but I have not heard nothing from my lawyer it was abit strange what went on with my property but what done is done and I would just like to claim some money back as my lawyer is not answering me

    1. Maria Luisa Castro

      Dear Stuart:

      I’m sorry to hear about your challenging experience with the property sale in Spain. It sounds like you’ve faced some complications, and the lack of clear communication from your lawyer is understandably frustrating.

      Here’s a brief overview of the situation and some potential steps forward:

      Retentions for Non-Residents: If you are not a resident in Spain, when selling a property, the buyer is obliged by law to withhold 3% of the purchase price and pay it to the Spanish Tax Office on behalf of the seller as an advance payment towards any potential capital gains tax liability. If you’ve sold at a loss, you should be able to claim a refund of this amount, or a portion of it.

      Documentation: For any refund claim, you will need all relevant documentation related to both the purchase and sale of the property, including any costs incurred in both transactions.

      Seek Assistance: Given that your lawyer is not responding, you might consider seeking assistance from another legal professional or gestor (an administrative agent) in Spain who can guide you through the tax claim process.

      Tax Return for Non-Residents: To claim the refund, you’ll need to file a tax return. This is the “Impuesto sobre la Renta de No Residentes” (IRNR). The refund process can take several months.

      Local Taxes: Ensure you’re up to date with local taxes, like the Plusvalía Municipal tax, which is based on the increase of the land’s value and is payable to the local town hall. If you’ve sold at a loss, there might be provisions for a reduction or exemption.

      Contact with Lawyer: It might be worth sending a formal letter or email to your lawyer expressing your concerns and the need for prompt action. If there is no response, you may consider filing a complaint with the local bar association or seeking advice from another attorney.

      Alternative Communication: Sometimes, reaching out to your lawyer’s office by phone or visiting in person (if possible) can yield quicker results than emails or messages.

      In conclusion, while the process can be intricate and potentially lengthy, you have avenues available to potentially reclaim some of the money you feel you’re owed. Due to the intricacies of Spanish property and tax law, it’s advisable to have a professional on your side. If your current lawyer isn’t responsive, considering alternative professional help might be a wise step. We will be pleased to help you with this and offer to you our terms and conditions

      Best regards

      Maria L. de Castro
      General Director
      Costaluz Lawyers

  2. I’m selling my apartment and I’m a resident and over sixty five should I have to pay CGT on the profit of my property. I’ve owned for more than seven years

    1. Maria Luisa Castro

      Dear Roy:

      In Spain, if you are over 65 years old and the property you are selling is your main residence, you are exempt from paying capital gains tax (CGT) on the sale. This exemption is part of Spanish tax law, specifically for tax residents who are selling their primary home. The key here is that the property must have been your main residence

      Hope the above helps

      Maria Luisa Castro

  3. Does the original purchase count.against the capital gain on a property. We purchased our original property for E145,000 and sold for E285,000 so made a profit of E140,000 less expenses. We then bought another property for E215,000 plus expenses. I would have thought 100% of our profit has been reinvested but our accountant thinks it works that owe tax due to selling at at E285000 and buying for E215000 so E70,000 shortfall of reinvestment. Who is correct ?

    1. Maria Luisa Castro

      Dear Andrew:

      In Spain, there is a provision for partial exemption on capital gains tax when the gain from selling your primary residence is reinvested in purchasing another primary residence. This exemption, however, is conditional on the amount reinvested being at least equal to the exempted gain.

      From your details:

      Original purchase price: €145,000
      Selling price: €285,000
      Profit: €140,000 (less expenses)
      New property purchase: €215,000 (plus expenses)

      The exemption would apply to the portion of the gain that has been reinvested in the new primary residence. If the price of the new property is not higher than the exempted gain, the exemption will be partial.

      For example, you have reinvested €215,000 out of the €285,000 sale price, which is approximately 75.4% of the sale. Therefore, only around 75.4% of your €140,000 gain (or approximately €105,560) might be eligible for the exemption. The remaining portion, about €34,440, could be subject to capital gains tax.

      The specific tax rate applied to the taxable portion of the gain depends on various factors, including the individual’s overall tax situation and applicable regional differences in Spain. Capital gains tax rates generally range from 19% to 23% for residents, depending on the amount of the gain.

      Hope the above helps/clarifies

      Best wishes,

      Maria

    1. Maria Luisa Castro

      Dear James,

      Thank you for reaching out with your request for advice on selling your property in Spain. To provide you with the most accurate and helpful guidance, I would need to know more about your situation.

      By understanding more about your property, your goals for the sale, and any particular challenges you foresee, we’ll be able to offer tailored advice that meets your needs. Please look out for my email, and I encourage you to share as much information as you feel comfortable with.

      Kind regards,

      María L. de Castro

  4. Martine Annette Cuffe

    I am enquiring on behalf of my elderly sister. My email is martine.cuffe@hotmail.com

    She wishes to return to the uk as she is becoming less independent as she is in her late 70s. She wants to know what taxes she will have to pay. She owns her own property and has residencia in Spain. She has lived there approx 24years

    1. Maria Luisa Castro

      Dear Martine,

      Thank you for contacting us.

      Regarding your tax question, in the event that your sister who is a tax resident in Spain sells her property that has been her main residence in Spain and has a capital gain from this sale, this gain would be taxed in Spain with Personal Resident Income Tax, although it may be subject to exemption to the extent that with the proceeds of the sale she buys a new main residence in the UK and fulfils all the requirements established by Spanish tax legislation.

      Likewise, your sister will also be subject to Municipal Capital Gains Tax if she sells the property in Spain.

      We could study the specific case and give you tax advice in order to determine whether the capital gain your sister obtains meets the requirements to be exempt from personal income tax. We could also tell you how much the amount of the municipal capital gain will be in the event that your sister sells the property.

      Therefore, if you wish, you can send us all the doubts you would like us to answer and we will send you a quote.

      We will be pleased to give you tax advice and defend your sister’s interests before the Spanish Tax Authorities.

      We remain at your disposal for any queries or comments.

      Best regards,

      Maria

  5. Hi ,
    We are looking to sell our house in Spain and move back to the Uk investing the gain into our primary residence in the UK . I have been told by two tax lawyers that I would be exempt from CGT for the re- invested amount , however I don’t think this is the case since brexit . Please can you confirm what the law states on this matter.
    Many thanks
    James

    1. Maria Luisa Castro

      Dear James,

      Thank you for contacting us.

      We can inform you in general that: if you have been a tax resident in Spain, and the property in Spain that you sell has been your main residence and you buy a new main residence outside Spain, as long as you meet all the requirements of Spanish tax law, this gain could be exempt from Spanish Personal Income Tax for reinvesting the amount obtained in a new main residence.

      However, we recommend that you review your case in detail, in order to determine whether in your specific case, you meet all the requirements for such gains to be exempt from Personal Income Tax.

      We can offer to study your case with your real situation, checking thoroughly the Spanish tax legislation and give you a proper answer. We will be pleased to offer you our tailored consultancy, which is a written reply or a tax legal report.

      Therefore, if you like, you can send us all your questions you would like us to answer you and we will send you a quote.

      At your disposal for any further clarification.

      Kind regards,

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top