Selling a property in Spain involves a series of expenses and tax obligations that sellers must take into account. In this article, we’ll explain these costs in detail, and what happens if the seller is not a tax resident in Spain, including the 3% withholding tax.

1. Main Costs for Sellers When Selling a Property

When you decide to sell your property, these are the main expenses you should consider:

a) Municipal Capital Gains Tax (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana – IIVTNU)

This tax is levied on the increase in the value of the land where the property is located. It is calculated based on:

💡 Important: Since 2021, you can request an exemption from this tax if you can prove that there was no capital gain from the sale.

b) Capital Gains Tax (IRPF)

If you make a profit from selling your property (i.e., the sale price is higher than the purchase price), you must declare it as a capital gain in your income tax return.

• Calculation:
  Capital Gain = Sale Price – (Purchase Price + Expenses related to purchase and improvements).
• Tax Rates (2024):
  • Up to €6,000: 19%.
  • €6,000 to €50,000: 21%.
  • €50,000 to €200,000: 23%.
  •  €200,000 to €300.000: 27%.
  • Over €200,000: 28%.

💡 Exemption: If you reinvest the full sale   proceeds of your main home into purchasing a new primary residence, you may be exempt from paying this tax.

💡 Exemption Sellers Over 65 Years Old:

• If you are 65 years or older and selling your primary residence, the capital gain is fully exempt from income tax.
• Primary Residence: To qualify, it must have been your habitual home for at least three years prior to the sale.

c) Mortgage Cancellation Costs

If the property has an existing mortgage, you will need to bear the following costs to cancel it:

• Registry cancellation: Notary and Land Registry fees.
• Early cancellation fee: As specified in your mortgage agreement, usually around 0.5%-1%.

d) Real Estate Agency Fees

If you used a real estate agency to manage the sale, the fee is typically between 3% and 6% of the sale price.

2. The 3% Withholding for Non-Resident Sellers

If the seller is not a tax resident in Spain, there is an additional obligation:

a) What is the 3% Withholding?

The buyer must withhold 3% of the sale price and pay it to the Spanish Tax Agency as an advance payment of the Non-Resident Income Tax (IRNR).

b) Purpose of the Withholding

This withholding ensures that non-resident sellers comply with their tax obligations in Spain, particularly regarding capital gains.

c) Subsequent Regularization

The non-resident seller must file Form 210 (non-resident tax declaration) within four months of the sale:

• If the 3% withholding exceeds the tax owed, the seller can request a refund of the excess.
• If the tax owed is greater than the withholding, the seller must pay the difference.

💡 Important Note: Non-resident sellers are not eligible for the exemption on reinvestment in a primary residence.

3. Other Additional Costs

• Energy Performance Certificate: Mandatory to formalize the sale, costing between €100 and €300.
• Habitability Certificate (if required): Depending on the autonomous community.
• Notary and Registry Fees (only if the seller assumes any costs, as agreed).
• Community certificate cost ;  Depending of each case.

Conclusion

Selling a property in Spain is not just about receiving payment for the property; it also involves covering certain expenses and fulfilling tax obligations. It’s crucial to calculate these costs accurately to avoid surprises. Additionally, if you’re a non-resident seller, the 3% withholding and subsequent tax declaration require special attention.

If you need help calculating your taxes or managing the sale of your property, don’t hesitate to contact us. Our team of experts is ready to assist you. 🚀