Sale / Purchase of Real Property

How to calculate

Capital Gains from the sale of Real Estate Property. As a result of the sale of real estate, taxable capital gains may arise. In general terms, a capital gain is determined by subtracting the purchase value from the sale value. Because of law changes in the past and transitory regulations, there are several different rules to calculate the capital gain, which mainly depends on the date of purchase.

To be able to calculate the Taxable capital gain you will need the following information:

Date of purchase: This will normally be the date where you signed the deed before the notary.
Purchase value: is made up of the price paid for the property plus the amount of the expenses is to be added, excluding interest rates. If the property had been rented, the purchase value determined as mentioned before, must be reduced by the depreciation corresponding to the rental period.
Sale value: is the amount for which the transaction has been carried out, having deducted the amount of the expenses and taxes referring to the transfer that the vendor has been responsible for.

Application Form

Please give us your details and we will calculate your taxable capital gain.

Your name
Your Company (Optional)
Your email
Kind of good
Date of purchase
Purchase value
Sale value
Comments

Please remember that the person who purchases the property, to a non Spanish resident, even if he / she is resident or not, is obliged to withhold and pay to the Treasury 5% of the agreed price. This payment is to be considered in the case of the vendor, as an advance payment of the tax corresponding to the transaction. Therefore, the purchaser has to forward to the non-resident vendor a copy of form the form that has been used for the payment of the withholding in order for the vendor to be able to deduct this amount from the tax due to be paid, as a result of the assessment of the capital gain. If the amount withheld exceeds the tax due, the vendor may request a tax-refund.

Nevertheless, if between the date of the acquisition of the property or the latest improvements (refurbishment) and December 31, 1996, ten or more years had passed, no capital gain should be considered. Therefore, 5% withholding tax will not apply.

Filing period: The purchaser has to make the payment of the withholding no later than one month after the date of sale.

Tax rate: 35% of the taxable capital gain (Please remember that there are several rules that will normally reduce the taxable capital gain)

Tax-refund of the excess withheld: In case of capital losses or in case that the withholding exceeds the tax due, it is your right to receive a tax refund of the excess withheld.

Other Information

Prior positive clearance from the General Directorate of Foreign Transactions is needed in certain cases.

The acquisition must be formalized before a Spanish notary public or by a Spanish consul abroad.

Payment of transfer tax or VAT and stamp tax. If the vendor is a private individual who is not deemed to be a property developer, transfer tax at 6% to 7% would be applicable regardless of the nature of the real estate to be sold.

If the vendor is a company or an individual developer, the following cases can arise:

Transfers of buildable land and first delivery of buildings: VAT at 16% (7% if the building is for housing) plus stamp tax at 0.5%.

Transfers of rural (unbuildable) land and second or subsequent delivery of buildings: Transfer tax or VAT. VAT is applicable if the acquirer is an entrepreneur or professional, and the vendor chooses to pay VAT rather than transfer tax.

If the real estate is located in the Canary Islands different taxes applies.

In order to ensure that the acquirer's property rights are duly protected, registration of the property in the Official Property Register is needed.