Property Sale in Spain
Property sale in Spain
When it comes to property purchases and sales, there is a huge difference between Spain and the UK. The local way of operating is to put the property on sale with as many real estate agents as the vendor wishes. There are a lot of agencies looking to sign a sales contract with exclusivity, but normally the local agents will not accept such contracts because it has never been the normal procedure.
The normal procedure in Spain is the following: The vendor gives the agent the price he wants for the sale on top of which the agent adds his own commission.
The amount of the commission depends always on the agent. Depending on the contents of the contract the sales price given by the vendor can include the commission but this normally only happens if both the vendor and the agent are foreigners.
The costs of the sale
According to local custom the major part of the property purchase costs is paid by the purchaser (see the list of property purchase costs).
The vendor is liable to pay the Tax of increased value of the land (Plusvalia) and the capital gains tax. The amount of the Plusvalia depends on the location of the property and the years of ownership.
The capital gains tax when the vendor is a non-Resident
If the vendor is a non-Resident in Spain the purchaser has the obligation of retaining 3% of the purchase price as a guarantee for the payment of the capital gains tax. The purchaser or his representative has to transfer this amount to the Spanish Tax Authorities. A request is than needed for a refund of this payment, using the payment slip as a reference. After approximately 6 months to a year the surplus of the guarantee money is refunded to the bank account of the vendor or his representative.
On the Spanish real estate market there is a lot of misleading information saying that the 3 % deposit is entirely refunded. The amount is refunded with the above mentioned conditions and seldom entirely.
Capital gains tax if the vendor is a foreigner resident in Spain
If the vendor is a resident in Spain the capital gains tax is 21%. He has to declare the property sale in his tax declaration and pay the taxes. If the vendor is thinking of buying a property which will be used as a permanent home, he is not tax liable for the capital gains tax. If the vendor hasn’t bought a new property for permanent living within two years, he is again liable for the capital gains tax.