The Sellers Tax Liability
Plus Valia Tax
Sellers are normally responsible for paying the Plus Valia Tax. Sometimes this could be negotiated to be paid by the buyer. This tax is set by the local Townhall and is based on the increase in the value of the land (not the property) from the date the owner acquired the property to the time of the present sale.
Capital Gains Tax
The seller will be responsible for the payment of his Capital Gains Tax (Impuesto sobre Incremento de Patrimonio de la Venta de un Bien Inmeuble). This tax has been increased a few years ago from 19% to 21% and is the tax based on the increase in value of the property from the purchase date to the date that it was sold. Any costs involved in the buying and selling of the property can be deducted as long as the seller can show official receipts with IVA (VAT) paid. Therefore, all purchase taxes, notary fees, legal fees (lawyer, etc) can be deducted.
Residents are exempt from capital gains tax:
- If you are resident and 65 or over and have lived in the property for 3 years or more and when you sell it, the gains are exempt from capital gains tax even if you do not buy a new property.
- If the property is a main residence and the net sale proceeds are reinvested in the purchase of another new home within two years.
In both cases you must be able to show that you have been tax resident in Spain.
Retention Fee – When Selling Property in Spain
If the seller is a non-resident, it is important to be aware that the buyer is obliged to withhold 3% of the purchase price and pay this amount directly to the Spanish Tax authorities. If the tax due is more than the retained amount of 3%, further tax will be due to be paid in Spain. The vendor must file a Spanish tax return on the transaction within three months of the sale.
Withholding the 3% of the sales price by the buyers Laywer, is a way of ensuring that the capital gains tax (CGT) is paid by the vendor, to prevent them from taking the money and not paying their tax bill in Spain.
If a person is not resident in Spain, tax may also be due in the country where they are resident, subject to any Double Taxation Treaty Relief.
Realty2Go has up-to-date knowledge of the current laws and tax liability. We are happy to advise any buyer or seller, who is buying or selling his property with us.