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Capital Gains arising from the Sale of Buildings

Capital gains resulting from the sale of property constitute taxable income. It is to be understood that this income has accrued when the property is transferred.

In general, the amount of the capital gain is determined by the difference between the cost price and transfer value of the property.

The cost price consists of the real cost price of the asset involved, plus all costs and taxes arising, excluding interest, paid by the transferor. Depending on the year of acquisition, this value is corrected by the application of an updating coefficient which is established annually, in accordance with the General State Budget Act.

For assets transferred during the year 2012, the coefficients are as follows:

Year of Invest Coefficient
1994(1) and before 1.2908
1995 1.3637
1996 1.3170
1997 1.2908
1998 1.2657
1999 1.2430
2000 1.2191
2001 1.1951
2002 1.1717
2003 1.1488
2004 1.1262
2005 1.1041
2006 1.0825
2007 1.0613
2008 1.0405
2009 1.0201
2010 1.0100
2011 1.0000

(1) When the investment had been made by 31 December 1994, the coefficient to be applied is 1.3637.

The application of a coefficient other than one requires the investment to have been made, at least, one year prior to the date of transfer of the building.

If the building being transferred had been rented, the value determined should be reduced by the amount of the depreciation corresponding to the rental period. This depreciation will also be updated in accordance with the year to which it corresponds.

The transfer value is the real amount for which the disposal was made, reduced by the amount of any costs or taxes related to the transfer paid by the seller.

As a result, the capital gain on which taxation will be paid consists of the difference between the transfer value and the cost price, determined as described above.

Nevertheless, if the property is transferred by an individual who purchased it prior to 31 December 1994, net gains will be subject to a transitory scheme and the previously calculated figure will be reduced.

If the transferor acquired the property on two separate dates or the property has been renovated, calculations must be made as if there were two net gains.

The person acquiring the property, whether resident or not, is obliged to retain and deposit 3% of the agreed price in the public treasury for purchases. This sum represents a payment on account on behalf of the seller of the relevant tax for the income resulting from said transfer. Therefore, the purchaser will give a copy of form 211, used to deposit the withholding, to the non-resident seller, so that the seller can deduct this withholding from the tax to be paid as a result of the tax return including the capital gain. Should the amount retained be greater than the tax liability, it is possible to obtain a refund of the difference.

In the event that the withholding is not deposited, the building will remain liable to payment of the lower of the amount of the withholding or payment on account and the corresponding tax.

  • Tax Return Form 210 when the building being transferred is jointly owned by a married couple where both partners are non-resident, exceptionally; it will be possible to file a single tax return.
  • When to file the tax return: three months from the end of the period that the person acquiring the building has to deposit the withholding (this time period, in turn, is one month from the date of the sale).
  • Where to file the return: At the Branch of the Tax Agency corresponding to the location of the property.
  • Tax rate: 21%.

Refund of excess withholding. In the event of capital gains loss, or in the event of a withholding greater than the total amount to be paid, there is a right to a refund of the excess amount retained. The refund procedure begins with the submission of return form 210 to the Branch or Administration indicated. The refund is made by bank transfer to the account nominated in the tax return. The holder of the account will be the non-resident taxpayer or their representative; in the event of the person being a representative, they must be expressly granted powers to receive the refund in the documentation showing their status as representatives. In the event that there is no account open in Spain, payment of the refund by cheque can be requested. The tax return form 210 shall always have attached to it the copy "for the non-resident" of form 211, which is used to deposit the withholding.

The Agency will make a provisional settlement within a period of six months from the end of the period established for filing the 210 tax return. If the provisional settlement is made out in the period established, the Tax Authority will proceed to refund on its own initiative the excess over the self-assessed amount. Following said six-month period, if the Agency has not made the refund as a result of causes that can be ascribed to the administration, then late payment interest will be added to the amount to be refunded. Spanish solicitors in London

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