EXPENSES WHEN YOU SELL A PROPERTY IN SPAIN
Which expenses can be expected after the sale of a property in Costa del Sol?
REAL ESTATE AGENCY FEES
The fees of a real estate agency refer to the economic amount that the buyer or seller must disburse to the agent in an operation for his work done throughout the process. This expense is borne by the seller.
That consist of a fixed percentage set out in a contract that is signed by both parties. The fees of MAR HOUSES are 5% (+ VAT) of the final price of the sale.
TAXES PAID WHEN you SELL A property
When somebody sells his property in Spain, he/she is responsible for paying the following taxes:
– A tax on the Increase in the Value of Urban Land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) or “municipal surplus”, paid to the local council.
– The Patrimonial Gains Tax (Impuesto sobre Ganancias Patrimoniales), commonly known as “state surplus” or simply “surplus”, which taxes the difference between the original purchase value of the home and the sale value, paid to the State.
As it would imply an increase in property, this last tax is included in the Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas, IRPF) of the seller, in the event that he/she is resident in Spain, or in the Non-Residents Income Tax (Impuesto sobre la Renta de los No Residentes, IRNR), if he/she does not reside in Spain.
If the sale value were lower than the original purchase value, if the overall increase in net value from the purchase and sale of the property was negative, the fee to be paid would be € 0.00 euros.
The buyer, on the other hand, will pay the so-called Tax on Transmissions and Documented Legal Acts, in its modality of Tax on Onerous Property Transmissions (link a “expenses of the purchase of a home”).
In summary, when buying a second-hand property in Spain, the taxes payable are the following:
— The seller pays the Tax on the Increase of Value of Urban Land (or “municipal surplus”) and the Patrimonial Gains Tax (or “state surplus”).
— The buyer pays the Tax of Transmissions and Documented Legal Acts.
Next we will see more details about the taxes paid by the seller.
MUNICIPALITY TAX ON THE SALE OF A PROPERTY IN SPAIN
Paid by the seller, the Tax on the Increase of Value of Urban Land (or “municipal surplus”) taxes the annual increase in the value of the land, which varies depending on the years passed (over a maximum of 20 years; only full years are considered, not fractions).
In Marbella, for example, the city council establishes the taxable base of this tax according to the following scale:
Period Annual Percentage
1 to 5 years 2.5%
5 to 10 years 2.3%
10 to 15 years 2.4%
15 to 20 years 2.5%
That is, if you buy a property in this location and you decide to sell it after 12 years, the corresponding annual increase will be 2.4%, according to the scale.
The percentage that you will have to pay is: 12 x 2.4 = 28.8. The municipality considers that, during the six years passed since the purchase of the property, the value of the land has increased by 28.8%.
The taxable base of the tax is, logically, the value of the land at the time when you made the purchase of the property. If the value of the land at that time was, say, € 100,000 euros, the amount to pay would be 28.8% of 100,000, or € 28,800 euros.
PATRIMONIAL GAINS TAX WHEN YOU SELL A PROPERTY
As we have pointed out, the Patrimonial Gains Tax, paid by the seller, taxes the difference between the original purchase price of the property and the sale price.
By sale price we mean the amount resulting after deducting from the value of the deed the amount of the Tax on the Increase of Value of Urban Land (IIVTNU), which we saw in the previous section, and the commission paid to the real estate agency with its corresponding VAT.
The taxable base of this tax, the sale value, would be established as follows:
Sale value = Deed value – IIVTNU – (Agency comission + VAT)
Which, then, is the amount imposed on this taxable base? The amount to be paid is established according to the following scale:
— The first € 6,000: 19% is deducted.
— From € 6,000 to € 50,000: 21% is deducted.
— From € 50,000 upwards: 23% is deducted.
This tax will be applied within the Personal Income Tax (“Impuesto sobre la Renta de las Personas Físicas, IRPF”) to be paid by the seller in the year following the sale (the IRPF is a state tax paid annually), in case the latter is resident in Spain, or in the Income Tax of Non-Residents (“Impuesto sobre la Renta de los No Residentes, IRNR”), in case you do not reside in Spain.
There are some exceptions to this rule: thus, those over 65 who sell their usual home for up to € 350,000 euros and invest the money in the purchase of another regular home will be exempt from tax for this “surplus value”.
Since January 2013, it is mandatory to provide proof of payment of this tax as a requirement to register the sale in the Property Registry. All laws and regulations are subject to change.
Important warning, we cannot guarantee or ensure that the information provided above is maintained over time, is subject to change, is indicative, and is not binding in any case.