A client has recently come to us and said we are going to sell in about 3-4 months time. What do we need to think about?
Capital Gains Tax
Please note that the Capital Gains is a tax calculated on the difference between the purchase price of the property originally, and the sale price of the house, not the value price. Therefore when you have an offer on a property, we can give a more approximate figure for this.
The difference between these two amounts, purchase price and sale price, is the profit which has been made. To gain a true figure, you must also deduct any expenses which can be demonstrated (i.e. by receipts). If the expense cannot be demonstrated by justified paperwork, it cannot be deducted from the profit.
The type of expenses which can be deducted are-
Notary Costs (with receipt of same)
Land Registry Costs (with receipt of same)
Purchase Tax Certificate (Certificate of, say, 8% & 1,5% taxes, where applicable)
Details of Costs of Selling i.e. Agency Invoice of Same
The amount left after a deduction is subject to tax at 19.00% when the sellers are Non-Residents of Spain. If the Capital Gains amount is more than the 3% Retention, the difference is required to be paid. If the Capital Gains are less than the 3% Retention, the difference should be returned by the Treasury (assuming that all annual tax returns are in order).
If you sell at 100,000€ the 3% retention would be 3,000€, but the total 19% would be 9,500€ so a difference of 6,500€ should be paid to the Tax Office on the next 4 months after the sale. As said before this can amount can be reduced by provided proof of legal expenses.
Plusvalia Tax is a Tax paid to the Town Hall. Every seller has to pay a tax based on the incremental value of the land which the property occupies over the number of years you have owned it.
Please before putting the property for sale, make sure that you have in place all paperwork required to sell a property. Please see here below a list of the documents required:
– recent invoices for all suppliers
– community certificate of no debts
– copy of Deeds
– last SUMA bill paid up to date
– Habitation Certificate
– Energy Performance Certificate
As many people are not aware of the meaning of the last documents this is a description for both of them here below:
– Habitation Certficate.- this document proves that the property meets the Town Hall habitability requirements. It is not possible for the buyer to take over your water contract without it.
– Energy Performance Certificate.- this is a new certificate to be provided since June 2013. It is compulsory to have it when you advertise your property for sale or rent.
Finally, other costs you might incur when selling are:
– If there is a mortgage on the property: Mortgage cancellation costs. If you ever had a mortgage on the property and this has not been removed from the Land Registry yet then it is required that the bank goes to the Notary to sign that they have received full payment for it. Later the document has to be taken to the Land Registry for them to remove the entry from the property. Both the Notary and the Land Registry will charge you for their services to cancel the mortgage. We usually need a provision of funds to pay them of 800€. If the mortgage has not been paid off yet the process is the same, only that the bank will receive the cheque on completion to redeem the outstanding amount.
- This cheque will be deducted from the final payment to you.End of building certificate: Some properties appear to be in construction at the Land Registry office, then this is certificate is required to certify that is fully finished
- Age Certificate or Extension Certificate: these might be required if the current property metres are more than the ones registered.
- Registering extra metres is far more complicated than only providing an antiquity certificate but as this will vary with every individual property, we would discuss this personally with you.
- Our legal fees. – Please take into account that we can assist you with any of the matters listed above and any other thing related to the sale of your property.