Selling a property in Spain.
Once you have decided to sell your property in Spain, you should ensure that all your property paper work is up to date – to include payment of all required local and national property taxes .
In setting your asking price for the property you should have regard to the current prices for property sales in your area for similar property – the local Hacienda (tax office) can assist with this if required – it is essential to ensure that you do not under declare the sale in the public sale deed -escritura – as this may lead to penalties imposed by the tax office if they consider that you are deliberately under declaring the price of your property.
You can place your property with a property agency or sell it yourself, if you place your property with a real estate agency there will be fees to pay ( these are generally paid by the purchaser within the sale price) – once a purchaser has been located you, the vendor will be required to sign a contract, the purchaser will also be required to sign a contract. At this stage a deposit is paid to you by the purchaser of between 5% and 10%. If you the vendor withdraw from the contract this deposit could become refundable to the purchaser, if you signed an ‘arras’ contract - you would be required to refund double the deposit .
Whether you are a non resident or resident in Spain defines what your tax liability will be for the sale of your property and it is advisable to engage a professional tax consultant or accountant.
In all cases whether resident or non resident in Spain, if you purchased your property during or before 1986 (escritura deed signed before the end of that year), your sale will be exempt from capital gains tax providing that you have made no improvements that are recorded in the land registry (this would include extensions etc for which building permission was required).
Non Residents:
Your capital gains tax liability is 18% of the difference between the acquisition price and sale price (as shown in the escrituras). There are deductions that can be applied and these include an annual deduction from the second year of ownership of 11.1% of the taxable base figure until 1996, then from 1996 a deduction is applicable that is equal to the rate of inflation as specified in the annual budget - More information is offered by the Spanish tax office.
The purchaser is obliged by law to withhold a sum equal to 3% of the purchase price and forward this on to the tax office. This is held on account against the calculation of the capital gains tax liability of the vendor, who then either has to pay more or claim a refund.
Residents:
You may be able to claim exemption in certain circumstances:
You are over 65 years of age
You are under 65 years of age and re invest the gain from your sale into another property - conditions do apply here and you should consult your accountant or the tax office for your own individual circumstances.
You are expected to declare the gain on the tax return that is completed the year after the sale takes place, the rate applicable is 18%.
The information here is intended merely as a guide, as all circumstances differ it is preferable to engage a specialist in taxation matters or contact your local tax office. There may also be issues with double taxation in your home country if a non resident.
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