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Preview the Expense Entailed in your Property Sale

Upon selling a property in Spain you shall incur in some expense, depending on the situation of the property, these being:

General expense
  1. Capital gains tax
  2. Plusvalia tax

Below you may find the definition as well as information on each of the expenses listed above:

Capital gains tax

The capital gains tax rate is 21% of profit , you shall be taxed at these rates upon the profit you have made in the transaction, i.e. the difference in price of what you bought your property for and the price you are now selling it at. There are various expenses that can be taken in to account upon the calculation of the profit, such as notary & registry fees, commissions or any funds spent on modifications, extensions or refurbishments made to the property, but of course you shall need official invoices to prove these expenses.

The Spanish government taxes Spanish fiscal residents and non fiscal residents at the same tax rate, 21% as we have seen before; but the manner in which the payment is required to be put in to effect is different depending on your fiscal residency status.

If you are a Spanish tax resident, you shall be required to pay your capitol gains tax when you draw up your corresponding tax return, on the contrary if you a not a Spanish fiscal resident, upon the sale of your property, 3% of the total sale price, whatever this may be, will be retained and sent straight to Hacienda Publica (Spanish Taxation Authority) accompanied by the tax form known as “modelo 211” , once this has been done you shall need to draw up the tax form “modelo 210” and also hand this in to Hacienda Publica, as it is via this tax form that we are able to deem the exact amount of tax that you are required to pay, in many cases hacienda will return funds that had been retained in the 3% due to the tax payable being lower than the amount initially retained, In other cases the tax form will reflect that you need to pay extra taxes on top of the 3% that had initially been retained due to a very high profit.

Plusvalia Tax

This is a local tax and must be paid to either the Town Hall corresponding to the location of the property or SUMA which is an official office appointed by the government to process tax payments.

Your Plusvalia tax will vary in accordance to the location, type and value of your property.

Other possible expenses
  1. Notary fees
  2. Registry fees
  3. Architect fees
  4. Town Hall fees
  5. Tax

If you property is not up to date in it’s legal situation you may find that you would incur in the expensive above, please see below a few possible scenarios:

  1. Since 2007 the habitation certificate Law has come in to force, meaning that each any every property must have a valid habitation certificate “cedula de habitabilidad” or second occupation licence “licencia de segunda ocupacion” (both documents having the same functionality).
  2. If your property does not have one, you would need to obtain it before being able to sell the property, this would entail the expense of contracting an architect to drawn up technical certificate and the Town Hall administration fees.

    If the property has any legal deficiencies the certificate will be denied and the conscience of not having the certificate is that the property will be cut off from any utilities, i.e. water, electricity, gas, telephone supply. Thus the importance of a valid habitation certificate or second habitation licence.

  3. Upon selling your property the land registry situation of the building will be checked, if the real square metres of the property do not correspond to the registered square metres, this will have to be amended, entailing the expense of contracting an architect for a technical report and measurement of the property and issuing of a certificate to state the real square metres, notary and registry fees for declaring the missing square metres and tax upon the value of the declared square metres.

    Usually you will find you self in this situation if after having bought a property you carry out extensions, modifications, build a swimming pool, etc. and do not carry out the corresponding new build declaration.

  4. On the day of completion of the transaction you shall be required to produce the paid IBI receipt for that year, if your yearly IBI taxes are not up to date you shall need to pay these and any penalties and/or fines before proceeding with the sale.

The above are just a few of many possible scenarios that could occur upon the sale of a property, thus, it is advisable to ascertain you total expensive upon the sale before committing to sale price, this will avoid nasty surprises and save you a lot of time.

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