Selling property in Spain involves a complex process with multiple taxes and fees, whether in major cities like Madrid, Barcelona, Valencia, or elsewhere. Sellers need to be aware and prepared to pay a series of taxes and fees. This article will succinctly introduce the main taxes and fees required when selling a house in Spain, helping you fully prepare.
Value Added Tax (IVA)
For the sale of new constructions, a 10% Value Added Tax (IVA) must be collected from the buyer. This applies to properties being sold for the first time, not to second-hand properties.
Capital Gains Tax (Plusvalía)
Another important tax that sellers must pay is the capital gains tax, known as Plusvalía, which is calculated based on the land value increase where the property is located. Following a legal reform in 2021, the calculation of this tax has become fairer, ensuring that the tax corresponds with the actual land value increase. The tax rate and calculation method vary by town, so it’s advisable to consult Circle Expats for an accurate calculation.
Capital Gains Tax (IRPF)
Profit from the sale of a property is subject to capital gains tax. For residents, the rate ranges from 19% to 23%, depending on the profit amount. For non-residents, the rate is 19%. For example, if you sell a property in Madrid, Barcelona, or Valencia and make a profit of €50,000, residents may need to pay capital gains tax ranging from €9,500 to €11,500.
Local Specific Taxes
- Madrid: The Madrid Community offers some tax benefits to encourage property transactions, including an exemption from capital gains tax for sellers over 65.
- Barcelona: In Barcelona, the calculation of Plusvalía is particularly important due to the rapid rise in land prices, which may result in higher taxes for sellers.
- Valencia: Valencia offers a relatively transparent method for calculating taxes, especially regarding capital gains tax, benefiting sellers by allowing them to understand their tax burden in advance.
Other Expenses
- Real Estate Agent Fees: One of the most common expenses when selling a property, typically ranging from 2% to 5% of the property price. Choosing the right agent can help you sell your property at the best price while ensuring a smooth transaction.
- Legal Fees: While not mandatory, hiring a lawyer for the property transaction can provide legal protection, with fees usually around 1-2% of the transaction amount.
- Energy Efficiency Certificate: Providing an energy efficiency certificate is mandatory when selling property in Spain, with costs ranging from €100 to €300, depending on the size and type of property.
In conclusion, when selling property in Spain, sellers need to be prepared to pay a variety of taxes and fees. Understanding the specific amounts and calculation methods of these taxes can help you make better financial planning when selling your property. Regardless of which city in Spain you are selling your property, it’s advisable to consult Circle Expats in advance to ensure you can accurately calculate and optimize your tax burden. This not only enhances the efficiency of the transaction but also ensures the maximization of your financial interests.