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When selling a property in Spain, do I have Capital Gains Tax?

When selling a property in Almeria, do I have Capital Gains Tax?

Capital gains payable for non-residents is 19%, if you are a EU or EEA citizen.

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. This is normally retained by an Abogado who provides a receipt within 30 days from the Tax office known as the Modelo 211. This shows the payment is made and you can apply for a rebate with this document.

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.

As a template for tax: up to €6,000 is 19%

21% for between €6,001 to €50,000

23% for amounts over €50,000

If it is your main residence (for at least 3 years) and you are over 65 there is no capital gains to pay. This has never applied to non-residents whether they are over 65 or not. This is because the concession is granted to people who sell their main residence and by definition, if you are a non-resident, it cannot be your main residence.

If you are over 65 but have not lived in the property for the minimum of 3 years before selling, you can apply a claim of relief for professional, legal fees and taxes on both the original purchase and sale. So, these would include agent fees, notary, lawyer etc. plus transfer tax on original purchase and plusvalia if payable.

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A common question we are asked:

Q. If the house is in joint names, what happens if only one of you is over 65?

A. If one of you is over 65, then their share (presumably 50%) will not be taxable, but the person under 65 will be liable on their share.

You can also claim for improvements such as additions to the property rather than maintenance. However, in respect of all claims for relief you will need invoices to support your claim, and these must include IVA where applicable. This is covered for A/C, Kitchen installation, upgrading bathrooms. In respect of these invoices for the last 5 years you need evidence of payment through the *bank where the invoice exceeds the limit for cash payments (*recently revised that up until 31.December.2016, you could pay up to €2.500 in cash and as of 01.January.2017 it is now limited to €1.000).

If you are under 65 there are no allowances unless you are reinvesting the proceeds in another main home and even then, it’s complicated if you are not reinvesting the total sale proceeds. The rules are:

  • That providing the property is your main residence, and you have lived there for over 3 years then you qualify for reinvestment relief.
  • The reinvestment can be 2 years before or after the date of the sale, and includes purchase in an EU member state.

To receive full relief the total amount of the net proceeds received must be reinvested.

So, if you receive a net amount of €150.000 (and the capital gain is €100.000) and you reinvest the full €150.000, you receive full relief and no capital gains to *pay.

*However, if you reinvest only €100.000, that is only 66.66% reinvestment, so capital gains is due on 33.33%, so taxed on €33,333 (tax of circa €7.000).

You must report the sale on your tax return for the year of sale and claim relief at the time of filing your returns via your accountant.

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