We are often asked by sellers to give guidance on the costs of selling their property. If you are Non-Resident and thinking of selling your property in the South of Spain we hope that the information below will help you to be prepared and avoid being taken unawares by the taxes and other costs involved.
As a non-resident selling a property in Spain there are various taxes which you should take into account. For Residents click here.
The first to think about is Capital Gains Tax (CGT). This tax is based on the actual growth in value of the property (profit) during your period of ownership. The rate charged is 19% on the profit for residents of EU countries and 24% for those resident outside the EU. The costs of buying and selling, including the fees and taxes may be deducted from the profit. This also applies to improvements you have done, provided you have a valid factura for the work.
When you sell your property, as a non-resident, the buyer will be obliged to retain 3% of the price and pay it to the Tax authorities on account of your possible tax liability. If you are selling your property at a loss, and all your taxes in Spain are paid up to date you will be able to reclaim all or part of the tax withheld. This is often referred to as Withholding Tax.
A more complicated and controversial tax is PlusValía. Plusvalía is a municipal tax which is payable to the Town Hall. It is based on the “official” increase in the value of the land on which the property stands during the period of ownership. The official value of land always increases in Spain, even when actual values have fallen. We can calculate the Plusvaliá payable for you but will need the date of purchase and copy of your most recent IBI bill. This tax is controversial because several Spanish Court Decisions have declared that the way this tax is calculated is not right, especially when the property is being sold at a loss. It is anticipated that the Government will legislate to change this tax however, at the time of writing (Autumn 2019), the tax is still in force and must be paid. In some cases it may be possible to claim a refund in retrospect. This is rare and you should rely on your lawyer’s advice on this point.
The costs of selling will include your Agency and Lawyer’s fees. Our Agency fees are calculated at the rate of 5% (+IVA) based on the price realised for the property. This is on a Success Only , No Sale – No fee basis. If you change your mind and withdraw the property from the market you will pay nothing. Our fees are normally paid at the notary at the time of the sale.
We always recommend that Sellers of properties use a lawyer. This will avoid potential pitfalls and language difficulties. We recommend involving the lawyer at an early stage in order that they may check that all your paperwork is in order and avoid last minute panics. Lawyer’s fees are usually calculated at the rate of 1% + IVA although for more expensive properties we may be able to find you a better rate.
If you have a mortgage on your property you will be liable to Mortgage Cancellation Fees. Even if the mortgage finished years ago you will need to check that it has been properly removed from the land registry. This will involve getting the bank to sign at the Notary and can cost between 500 and 1,000 Euros. It is well worth bringing this to your lawyer’s attention at an early stage. Please check with your bank as to whether there are any mortgage redemption fees to pay.
When planning for the sale of your property we would suggest that you go through the following checklist :
If we may be of help at any stage please do not hesitate to contact us.