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Thread: Taxes when Selling Spanish Property

  1. #11
    Sue Price
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    Default Taxes when Selling Spanish Property

    When I bought my finca it cost 42000euros. The valor catastral is now 39,847,89 pesetas. I make that about 239000 euros. Ihave extended the property to a large villa. What plusvalia[more or less] would I be paying if I sell?

  2. #12
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    Dear Madam,

    You can request an estimation of the town hall where the property is located.

    You will need the original Title deed and the intended sales price and date of sale of the property.

    As a sidenote, I hope you registered the extension, otherwise your buyer may run into problems:

    Buying Property In Spain Part I. Buying Resale: Avoiding the Pitfalls - 31st January 2010

    Quoting an excerpt:

    2. Has the Property Been Registered Properly?

    It is commonplace that extensions on properties are unregistered at the land registry. You will only find out on requesting a mortgage loan when the bank either turns you down or else offers significantly less money than what you were expecting because the extensions remain unregistered i.e. a 4 bedroom villa which has only 2 bedrooms registered at the Land Registry.

    This problem can be easily overcome by signing a New Build Deed at the Notary and paying the associated local tax levied by the Town Hall for the extension. This deed is then registered and the property description is amended accordingly adapting it to reality. This ought to be done by the vendor prior to the sale, unless agreed otherwise. This case is especially true of rural properties.

    Other cases, such as illegal rural properties, may be fraught with legal problems i.e. the property had only been given a licence to build a small tool hut of 3x3 m2 to plough the fields and yet a villa has been built instead. Rural properties can be a legal quagmire and it is essential you retain a lawyer to act on your behalf and best advice you on the matter, from the very beginning.

    In other cases, for perfectly legitimate reasons, properties remain unregistered or they lack the Title Deed (escritura). i.e. property inherited from one generation to another. There are different legal ways to overcome this minor problem: Acta de Notoriedad or else following an Expediente de Dominio.
    Yours faithfully,
    Raymundo LarraÃ*n Nesbitt

  3. #13
    Senga
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    Default Taxes when Selling Spanish Property

    i live in the UK but we have a holiday apartment in Lanzarote which is in my husbands name only does this mean i have no rights to the property

  4. #14
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    Dear Madam,

    What nationality do you and your husband hold?

    Did did you marry in the UK?

    Yours faithfully,

  5. #15
    Paul
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    Default Taxes when Selling Spanish Property

    We bought a property in 1984 for the equivalent of 16.000 euros. We want to sell it to our son for a reduced price of 80.000 euros thought the real value is twice as much. Can you tell me if we will have CGT to pay and if so how much?

  6. #16
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    Dear Sir,

    The answer to your query is in the article which starts off this very thread:


    Taxes when Selling Spanish Property

    2nd of May 2002

    Capital Gains Tax (non-residents)

    A non-resident seller is liable for payment of a 35% (as from the 1st January 2007 this has been lowered to 18%) Capital Gains Tax on the profit of the sale of their property unless it was bought before January 1st 1.987. However, there are exemptions available for those who have owned their property since 1.994 and before. Also, the vendor can offset against the gain made on the sale other costs.

    A vendor will be able to mitigate his tax exposure by three different ways:

    Reductions on when the property was purchased

    Those who bought a property after the 31st of December of 1.994 will not be entitled to any reductions.

    Those who bought in 1.987 of after will enjoy of a reduction of 11.11% on the net gain for every year they have owned the property before the 31st of December 1996 after taking the first two years. This means that a seller starts benefiting from this reduction, his first 11.11%, if he bought in 1.994, 22.22% if he bought in 1.993 and so on.

    Those who bought before the 31st of December 1.986 will be pay not tax, as the cuttoff point is 1.996.
    Yours faithfully,
    Raymundo LarraÃ*n Nesbitt

  7. #17
    Christine Dalton
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    Default Taxes when Selling Spanish Property

    We sold our apartment in La Manga last October and although below the market price we thought ourselves lucky to sell as the market was not brilliant.We paid all our dues and more and were actually shocked at the amount of fees and taxes we eventually had to pay. OK we said we have at least brocken even...sort of. Then we are told that the government holds back another 3%.....for what??? We have been told that this will be reinbursed within 12/18 months when they can prove we dont have any debts etc on the property!! This is rediculious, before we sold the lawyer had to pay all bills etc and we owed nothing,if anything we now have lost money also when we do eventually receive this 3% it will be subject again to lawers fees and transfer fee's to our bank in the UK. Come on... where is the EU in all this,this would not and could not happen in the UK.What about the interest on my 3% for 12/18months...do the Spanish government get this...who pays for my lawyer etc. Not fair,..lets get our act together,there are so many people buying abroad and they should ot be ripped of!!!!

  8. #18
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    Dear Ms Dalton,

    On selling a property in Spain you are liable for two taxes only:

    1. Capital Gains Tax: taxed at 19% for all sales after the 1st of January 2010 for both residents and non-residents alike.

    2. PlusvalÃ*a tax: which is a tax levied by your Town Hall where the property sold is located and taxes the imputed increase in value of the land since you purchased it.

    The 3% you mention is not a tax. People often make this mistake.

    The 3% is a retention withheld by the buyer and paid into the Spanish Tax office on account of your Capital Gains Tax liability as a non-fiscal resident.

    CGT is paid normally on the following year after the property has been sold. The problem with non-residents is that the Spanish Tax office runs the logical risk that on selling-up in Spain you will vanish into thin air and never pay the CGT owed on the following fiscal year. This happened frequently with non-residents whether on purpose or not.

    Which is why this system of a retention was brought into place whereby a retention is applied on the buyer on account of the vendor's fiscal liability (so they do not run off to their homecountry without paying taxes on the sale of the property).

    The way it works out is as follows:

    CGT is taxed on the profit you make between what you paid for the property on buying it and what you have sold it for.

    So three scenarios are possible:

    1. You make a profit. In which case you will be taxed at 19% on the said profit. the 3% withheld is used to pay this off. If there is a balanace it will be refunded to you providing your lawyer lodged tax model 212.

    2.- You make a loss or you break even: you are entitled to a full refund of the 3% plus legal interests. The taxable base in tax model 212 can never be negative so it will be zero (break even). This refund normally takes on average between 12-20 months and will be paid into the Spanish bank account you designated.

    So bottom line, it is not a God-given right to be entitled to a full refund on the 3% withheld before the Tax office, this is also a common mistake. The refund will hinge on your CGT liability as explained above.

    I hope this clarifies the matter for you. If you're still in doubt just post your queries on this thread.

    Yours sincerely,
    Raymundo LarraÃ*n Nesbitt

  9. #19
    L Davies
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    Default Taxes when Selling Spanish Property

    Hi. We bought an apartment in Mallorca in 2005. We paid 240,000 eur however 60,000 was in "black" money. We have now received an offer to sell of 300,000 eur. We are non-residents. Will we have to pay 19% tax on the difference of 60,000 or would it be 120,000? We found out a year after we bought that the solicitor we used was dodgy (they were recommended by the estate agent who are no longer trading!) Many thanks

  10. #20
    Senior Member
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    Dear Sir,

    That is exactly the reason why we always recommend not to underdeclare, besides being illegal of course.

    As you have offically paid and declared €180,000 you will now be held liable for the difference: 19% on the profit (€120,000) = €22,800.

    You can always offset expenses and invoices to bring the taxable profit down so as to pay less CGT.

    In your case you saved yourself by underdeclaring paying 7% on the €60,000 = €4,200

    But you will now have to pay 19% on the underdeclared €60,000= €11,400

    So basically you've lost €7,200 on having underdeclared.

    Yours faithfully,
    Raymundo LarraÃ*n Nesbitt

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