What taxes do I need to pay if I sell my Spanish Property?

If you are thinking of selling your property on the Costa del Sol, or elsewhere in Spain, the main tax you will need to pay is Capital Gains.

In Spain, this tax is referred to as “Ganancia Patrimonial” and is basically worked out as the difference between the purchase price – valor de adquisición – you initially paid for your property and the selling price – referred to as valor de transmision in Spain.

It is important to note that the figure used as the purchase price isn’t just the price you paid for the property; you have to add all the associated costs to this figure: for example, the ITP or transfer tax you will have paid. These figures then have to be adjusted by a correction coefficient: this is because the law in Spain determines that part of the capital gains should not be liable for taxation as it derives from inflation from the date of purchase to the date of sale.

The sales price (valor de transmisión) is calculated as the price received for the sale less all costs assumed by the seller – for example, the commission paid to a real estate agent.

 The resulting figure – valor de transmisión less valor de adquisición – is the “Ganancia Patrimonial” (Capital gains) obtained; this figure is taxed at a fixed rate of 18%. It is important to note that due to recent fiscal changes, this tax rate will rise to 21% as from June of 2010).

If you purchased your Spanish property before 31^st December 1994, there are other important deductions you can apply which will significantly reduce your tax liability. We would recommend you speak to a Spanish tax specialist if these deductions apply to you.

This entry was posted on Thursday, December 17th, 2009 at 5:32 pm You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.