There are two taxes on property sales:
Capital Gains Tax (Incremento de Patrimonio)
Capital Gains Tax is due on the profit made on all property sales in Spain. Please note that a Resident is someone with a valid Residence Card or with a Certificate of Fiscal Residency obtained from the Tax Office.
Capital Gains Tax for Residents is charged at a maximum of 18% of the sale profit, after the first year of ownership. There are additional variables which affect the final calculation for Residents (for example, for those who purchased their property between before 1996).
Exemptions from Capital Gains Tax apply to:
- Residents over the age of 65 who have lived in the property as their main residence for a minimum of 3 years
- Any Resident re-investing all the sales proceeds from his main residence (where he has lived for a minimum of 3 years) into another Spanish property that will be his new principal residence (with a pro-rata exemption if a portion is re-invested)
Remember that because Spanish taxes are paid one year in arrears (the year after the year in which they were incurred), the details of your property sale are declared on your annual Tax Return the following May - this means that you may still have some tax obligations after the date of the sale.
Plus Valía
Officially called the Impuesto Sobre el Incremento del Valor de los Terrenos, this is a tax charged on the increase in the official assessed value, rather than the market value, of the land since it was last sold. The rate may vary according to location, land size and the time elapsed since the last transfer of title. This tax applies to both new and resale properties.
