Selling a property in Spain can be quite complex if you do not have the right information in advance, especially concerning your tax obligations.
If you are a non resident, when you sell you will receive 97% of the sales price and the purchaser will pay the 3% difference to the Tax Authorities via the Modelo 211. This is NOT your capital gains tax but instead a “retainer”.
Within four months of the sale you will have to present your Capital Gains Tax via the Modelo 210. The tax is 19% of the difference between the Sales Value and the Purchase Value. If this is more than the 3% retained then you will have to pay the difference, however if it is less you will be able to apply for a refund.
Remember, any tax paid in Spain can then be offset in your country of residence as a “tax credit”, subject to the Double Taxation Treaty between both countries.
What is the sales value?
Sales price less any costs incurred, such as, commission paid to the Agent, Notary and Registry fees for the cancellation of a mortgage, lawyer’s fees etc.
What is the purchase value?
Purchase price plus any costs incurred, such as, property transfer tax, notary and registry fees, lawyer’s fees, translator fees etc.
What about renovation costs during the years of ownership?
It is important to understand what are considered as improvements and what are considered as maintenance as only improvements are deductible in the calculation of the CGT.
Improvements are understood as “new investment” which consequently increases the value of the property, such as, structural works and extensions. Repairing walls, roof and tiling would be considered as repairs and not deductible.
Best you see seek advice on the costs you are able to offset in your tax calculation to avoid any unwanted surprises.
EBF Consulting has a team of experts to advise you, so please contact firstname.lastname@example.org for assistance.
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Information by E.B.F Consulting S.L. E.B.F Consulting has been providing tax and accounting services to expatriates in Europe since 1999. Office is based in Lanzarote, Spain. Visit www.ebfconsulting.com for more details. Copyright© E.B.F Consulting 2021 All Rights Reserved.