There is often confusion over costs that accrue to the seller

A) The tax on the gain from the sale

The profit made with the property has to be taxed at 19% since 1 January 2010. The basis for calculating this is the margin between the purchase price and the sales price according to the information in the escritura. However, this is not entirely correct, because there are certain values and multipliers that can be deducted. For example, the ancillary costs associated with the purchase, such as the land transfer tax and the estate agent's fees, can be deducted from the purchase price and thus reduce the taxable value. As a rule of thumb, you can work out the taxable amount by the difference between the price at which you sell minus the price at which you bought the property. This difference is taxable at 19%. The retención can be seen as a kind of down payment on this amount. 

Retention in the case of non-residents

To prevent sellers who do not live permanently in Spain from leaving after the sale of their property without giving their new address and without paying the profit tax, the so-called Retencion was introduced by law: The buyer is obliged to retain 3% (retención) of the purchase price and not give it to the seller. The buyer pays this sum to the Spanish tax office as a kind of advance payment on the seller's tax liability. (The Retencion is automatically withheld by the responsible notary's office and paid to the Spanish tax office). The seller therefore does not receive 100% but only 97% of the agreed purchase price. The buyer pays the agreed amount, but in different payments, all of which add up to exactly the same amount as the sale price. If the amount withheld exceeds the actual taxes to be paid, you can claim this back from the tax office by means of the corresponding tax return.

Does retention exist for residents?

Permanent residents of Spain do not have to pay a 3% retención to the Escritura if they are also tax residents. The emphasis is on tax. It is not enough to be registered as a resident in Spain, but you also have to have made your tax declaration in Spain as your first place of residence for at least three years. (Caution, here too there is often confusion, because there are also tax returns of residents which, however, were not made as annual tax returns. These are not recognised). You must prove that you are a tax resident by presenting a form from the tax office to the notary, the so-called "certificado de residencia fiscal de residentes".

Tax exemption for tax residents

No tax is due on the sale of the main residence if the owner is over 65 and a tax resident.Or, if the house for sale is the seller's only property (regardless of age) and it is used as the main residence. Then the proceeds of the sale are tax-free if they are used within two years to buy a new property in Spain.

B) Surplus value (Plusvalia)

Generally, this tax is only called "Plusvalia" (Impuesto sobre el incremento de valor de los terrenos de naturaleza urbana) This tax is levied by the municipalities. The only factors taken into account are the size of the plot, its location and the period of ownership. Buildings on the property are not taken into account.

C) Property IBI taxes

This tax is due in late summer / autumn. Even if the sale of the property takes place in January, the seller is obliged to pay the IBI for the full year. The IBI is levied on the cadastral value.

D) Corrective action of property documentation

The seller is obliged to sell the property with correct documentation. Often, however, extensions are not yet fully registered. We can almost always take care of this before the escritura, but the seller bears the costs incurred.

Energy efficiency certification

The Spanish government introduced the certificates for anybody selling or renting a property.

A certificate must be issued by an architect, engineer or a qualified technician who is authorised to undertake building projects and thermal installations for buildings. Not all architects and engineers are certified. The professional must belong to an official provincial association and have a membership number.

The price should be between €200 and €750 Euros per home.

E) Cancelling a mortgage

If you have a mortgage on the property, you will still have to pay cancellation costs to your bank. Your bank will be happy to inform you about the exact amount.

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