Capital Gains

When selling your own property ( or gifting it), you as the owner have to pay tax on the capital gains.

The regime of the capital gains only applies to assets that were not destined for a business or professional activity within the three previous years to the selling or gifting (business premises, offices, stores, etc, what in Spain tax rule is called “Establecimiento permanente”)

Capital gain is the difference between the value of the acquisition ( purchase price or value of the inherited property) and the value of the transmission ( sale or gift).

1.-The value of the acquisition is as follows:

a)If the asset had been purchased, the value of the acquisition will be the purchase price, plus the taxes paid at the time of purchase and the costs and expenses incurred by the buyer ( notary, lawyer, estate agent fees…).

( Please remember that plusvalía is a tax paid by the seller, but sometimes it is agreed that the buyer will pay. In this instance when the buyer comes to sell the property, they can not include what had been paid as plusvalía, because it was not an expense but a part of the price).

b) If the asset you are selling or gifting was inherited or gifted, the amount of the acquisition will be that declared for the inheritance or gift tax plus any taxes, costs and expenses you have paid.

2.-The transmission value is the purchase price, or the value which the assets have in the gift and inheritance taxes if the transmission is by way of gift or inheritance.
To this value the taxes and expenses you may incur at the time of transmission must be added.

The difference between 1 and 2 are capital gains or losses.

If during your ownership you have refurbished, built or in any other way improved the asset, the capital gain must be calculated in two stages. The first from the acquisition of the plot of land or the building before refurbishment to the date of selling or gifting, and the second from the date of the building or refurbishment to the date of selling or gifting.
Therefore, if the total transmission value of the asset is 100, this must be divided into the value corresponding to the land or building before refurbishment (e.g. 70%) and into the value corresponding to the building or refurbishment ( 30% in this case).
This could be important if the asset was acquired before 31/12/1994 for the transitional regime to be applied.

If you are a non resident

Once the capital gain is calculated it is taxed at a fixed rate of 19%

The buyer will retain, from the purchase price, the 3% to pay for your income tax as a “ganancia patrimonial”.

The buyer will pay in that amount to the Tax agency within one month from the date of purchase. The seller will declare the sale and pay in the excess within three months from the date of purchase.

If the total tax amount ( 19% of capital gains) is over 3% of the purchase price that has already been paid, you will need to pay it, and if it is under, you will get back the difference

If you are selling your home in Spain to acquire a new home in Spain, the capital gain will not be taxed if the selling price is reinvested in a new acquisition if you are a resident in the EU or Iceland

If you are a resident of Spain

If the difference is positive, it will be taxed in what is called ” base imponible del ahorro” in the annual income tax declaration. The total amount to be paid will depend on your other capital incomes, capital gains and some of your personal circumstances.
The rates are as follows:

From 0 to 6.000 19% = 1.140
From 6.000 to 50.000 21% = 9.240
50.000 plus (10.380 plus) 23 %

If the difference is negative, it could be compensated for, by positive capital gains obtained in the following four years.

There is a “transitional regime” for assets acquired before 31 /12 /1994 which applies both to residents and non residents.

There is a special regime “in the Basque Country regarding Capital Gains”