Obtaining a property or selling property is considered as taxable income in Spain. Therefore, different types of taxes are applicable on selling property by the Spanish government as stated in Rafleys.com.
In this article we cover all those taxes which you have to pay if you are in real estate business or you want to sale your personal house or property.
Withholding tax is about 3% of the total price of property. Tax value is determined by the difference between the conveyance value and the acquisition value.
In case if you are seller and not a legal or natural citizen of Spain, the buyer is under obligation to withhold the purchase price. The percentages are set by the governmental department for property selling and at the moment it is fixed at 3%, which is payable within a month to the Spanish Treasury by the buyer.
However, in the case of equity loss, a request can be produced if the withholding sum is greater than the amount payable by the seller as Capital Gain Tax but it must be submitted on a specific form by the Spanish Tax Office to claim refund. Rafleys.com has the specialized professionals to look after the mater in this regard.
If the Spanish Tax Authority does not challenge that statement, those extra amounts will be paid back in the period of 10 months from the date of selling property. However to claim the refund, it is necessary that your tax returns and annual income returns as a non- resident and other documentation in this regard should be up to date.
This is kind of a municipality tax that you have to pay on the selling property. According to Rafleys.com, Plusvalia Tax is calculated on the basis of increase in the values of the land on which the property is located. This tax is payable by the seller of the property. Tax amount is variable on location, surface area of the land, town to town or city to city basis.
Capital Gain Tax
As discussed earlier by Rafleys.com the income obtained through property selling is considered as taxable income by the governmental authorities. Capital Gain Tax is applicable on fixed percentage basis. The rate of this tax was 20% in 2015; however it is reduced to 19% from 2016 onwards.
The formula to obtained net profit is to calculate the difference between the purchase and sale price of the property, which will be subtracted respectively. Application of indexation to the resulting purchase value was abolished as from January 1st 2015.
For homes that are acquired before 31st of December 1994, there is a special transitional arrangement that enables certain reductions to be applied when calculating the CGT.
These are the kind of taxes which are applicable if you are selling property in Spain. There are several which you will have to bear during the process such as lawyer fees, estate agent fees, and expenses for energy performance certificate as well. We will cover these expenses in our forthcoming posts.
For more details, you can consult to Rafleys.com which is an authentic firm in property selling and renting issues.