Taxes on Selling Property

Whether you are resident or not you have to pay tax on the “profit” when you sell a property in Spain, this is called Capital Gains Tax. The profit is generally calculated as the difference between the selling price and the purchase price. There are certain reductions in the taxes to be paid depending on certain criteria, for example properties acquired before December 31 1994 benefit from a reduction of 11.11% per year for each year the property was held.

If the seller of the property is non-resident then the buyer holds back 5% of the sales price in order to pay the taxes. This is normally handled by the notary or lawyer handling the purchase. The 5% is paid to the tax authorities and a copy of the form is given to the seller in order that they can complete their tax form and deduct this amount from their Capital Gains tax. If the amount withheld exceeds the tax due then the excess is refunded. If the withheld tax is not paid over to the tax authorities then the liability is attached to the property.