Selling Your Property
A simple guide to selling your property in Spain
Selling your property in Spain involves a number of obligations and costs that must be faced by the seller.
The general rule selling a property in Spain is that the purchase is made free of any debts, liens and encumbrances, being up to date with payments and taxes, and free of tenants and occupants
The current market conditions in 2022 probably make it more of a seller's market than a buyers's market. Nevertheless, when we do get the qualified buyer through the door, you really want to maximise your chances of selling, rather than leaving it to chance.
It is common knowledge that most buyers make up their mind whether or not they like a place within the first 30 seconds of entering. Therefore it is essential that as a seller you need to captivate the buyer's imagination as soon as they walk through the door. Many sellers fail to present their house in its best light, and as a result lose the buyer as soon as the buyer enters the property. The key is to play to all the buyer's senses – vision, touch, taste, smell, and sound. Our buyers need to be able to make an informed decision so we present a house in full transparency.
Remember, VIP España are not only selling your house, but selling the type of lifestyle someone can enjoy by owning your house!
Let's cover a few of the selling basics and the sales process:
The Selling Basics (The Costs involved in Selling) When it comes to selling your property you must take the following costs into account, otherwise you will end up with far less in your hands than you expected:
- i) Capital Gains Tax: CGT is set at approx. 19% of your profits. However, if you are non-resident, on completion 3% of your initial sales price will be retained as a partial retention for your CGT liability. Please note, it is the buyer’s responsibility to retain this 3% and pay it to the tax authorities on your behalf. If your profit is lower than this amount you can claim back the difference. If it is higher, you should pay the balance to the Spanish taxman within 2 to 3 months after the sale.
- ii) Plus Valia: Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana. The plusvalia is a local (municipal) tax charged by the town hall on properties when they are sold. It is calculated on the rateable value of property and the number of years that have passed since the property was last changed hands. The objective is to tax the increase in the value of the land on which the property stands, some of which is due to improvements to the area carried out by the local government and the community at large.The base for this tax is the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount due in tax will depend on how long the seller has owned the property: the longer the period, the higher the amount of tax.
Legally this is paid by the vendor. The Plus Valia must be paid within 30 days of the completion of your sale.
- iii) Mortgage Cancelation Fees (if applicable): If you have an existing mortgage on your property you will need to pay about 1.000 Euros to ensure the mortgage is officially cancelled at the Notary and Registry Office. Often this amount is retained by the buyer for them to ensure the fees are correctly administered. You may also have some cancellation charges from the bank so make sure you check.
- iv) Legal Fees: If you choose to use a lawyer to help you when you sell, the conveyancing fees will be about 1% plus IVA / VAT.
- v) Ensure all your community fees, IBI (rates) and utility bills are up to date. If any of these bills are not up-to-date the buyer may insist on retaining any outstanding amounts due from the sales price.
- vi) Real Estate Agents Fees: If you have sold your property through an agent, ensure you take their fees into account. Typically, our fees will be about 3% plus IVA for V.I.P Clients non exclusive however for multi agency, we request a commission fee match.
- Always consult your lawyer or tax advisor before selling your property, so you know exactly where you stand tax-wise. We can also offer your assistance with Money Exchange to maximise your returns.
We will require sellers to be aware that we ahere to the Decreto 218/2005 which requires us as an agent to be in possession of a copy of the property documentation to market and sell your home.
For VIP España to get the paperwork together, all we need is a signed listing agreement in place. We will be happy to assit you in with the paperwork and arrange the certs. It must be clear what we are selling so it can be presented to a buyers legal.
In order to do the necessary due diligence, We would need copies of the following:
• Deed or Copia Simple
• Nota Simple (We can request this upon receipt of the deed)
• EPC - Energy Rating Certificate (We can request this upon receipt of meeting the Degree218)
• Last two years IBI Receipts (Not the Direct debit)
• ID of vendors (NIE and Passports)
• Copies of the Rubbish, Water and Electric Bills (Not the direct debit)
• If a community based property, we will need the contact details of your administrator.
Selling your home In Spain? Make an informed decision (*Raymundo Larraín Nesbitt ©)
Options on how to mitigate a seller’s Capital Gains Tax (CGT) liability:
Full exemption:
- All tax residents over 65-years-old are exempt from paying CGT when selling their main residence / abode ( this is the term "vivienda habitual", in Spanish legal jargon).
Rollover relief
Any resident seller under 65-years-old is exempt from paying CGT on selling their main home providing all the following conditions are met:
- Seller is under 65 year-old.
- Seller is (tax / fiscal) resident in Spain.
- The property must be his / her main home (i.e main residence and must have lived in it permanently for the 3 previous years - proof required such as providing the “Certificado de Empadronamiento”).
The Empadronamiento, also known as the Padrón Municipal de Habitantes, is a municipal register or census record, similar to an electoral roll. To register on the Padrón is to “empadronarse“. Registering on the empadronamiento places a resident of a town on the list of local inhabitants.
- It may be less than three years under exceptional circumstances i.e. job change, marriage or separation.
- Sales proceeds are reinvested in a new main home (in Spain or else in the EEA/EU, including the United Kingdom in a pre‐Brexit world). Any sales proceeds not reinvested will be taxed pro rata.
- There is a two year deadline to reinvest the sales proceeds (on a new main residence).
Pension annuities – Always consult your accountant for up to date information:
This third tax relief is in addition to the above two main home tax reliefs and applies to residents.
Any capital gains made by resident taxpayers over 65-years-old will go untaxed provided the following are met:
- Sales proceeds reinvested in pension annuities.
- Capped at €240,000.
- Six-month deadline as from sale.
The traditional method
Your Abogado / Accountant can offset from your CGT liability on selling, all expenses that went towards buying the property plus any refurbishment costs, provided you have VAT invoices to back them up. It is also advisable to show proof of payment such as Bank transfer receipts. Applies to both residents and non-residents.
- Legal fees (when purchasing originally).
- Notary fees (on buying).
- Land Registry fees (on buying).
- Taxes / Transfer fees (on buying).
- All property-related improvements (however not maintenance costs) i.e. glass curtains, refitted kitchen, roof retiling, wood flooring, A/C, house alarm etc.
*Article and information kindly provided by Raymundo Larrain who is a Spanish lawyer that is a specialist in conveyancing, taxation, probate and inheritance cases for ex-pats in Spain - https://www.larrainnesbitt.
If you wish to make an informed decision to sell, Contact VIP España. We offer the most competitive fees in the market and it is always No sale / No fee. Hola@vipespana.com