If you are planning on selling your property in Spain, know that the process might differ from that of your home country. The good news is though that careful preparation and smart decisions can help everything run smoothly. We have prepared a small need-to-know guide for you:
First steps in selling my Spanish home
It’s a given that if you are selling a house, then you were once on the buying side of things. Do you remember when you expected the seller to provide any and all information you asked for regarding the property? Well, you will now be expected to do the same. Make sure to gather all documents related to the home so the buyer can do their due diligence and check that everything is legal. This will include certificate of ownership, Land Registry documents, information regarding on-going costs and taxes, and so on. You are also legally required to provide them with an Energy Efficiency Certificateshowing how costly the property will be to run.
Another first step is to get your property valued so you are able to put it on the market for the right price and not over or undercharge a future buyer. If you are working with an Estate Agent they will help you with this by providing you with references from similar properties they have sold in the area.
What documents will I need to provide for the sale?
You will be asked to provide the following paperwork:
- Copy of the title deed of purchase and an updated land registry report.
- Personal documents: NIE, passport and certificate from the Tax authorities for foreign Spanish residents.
- Power of attorney: if a legal representative will be acting on your behalf.
- Utility bills pertaining to the property (electricity, water, gas, municipal IBI tax, garbage collection tax)
- The three last minutes from the Community of Owners, if applicable, as well as the bylaws and regulations and a certificate from the President proving that there are no outstanding debts owed by this particular owner.
- Energy Efficiency Certificate or CEE. This must be stamped by the Andalusian government and issued by an architect.
- License of First Occupation (Licencia de Primera Ocupación) or, if not applicable, a non-offense report. Both are issued by the local Town Hall.
Taxes & Costs involved in selling a property in Spain
The taxes you will have to pay when selling a property in Spain are as follows:
1) “Plusvalia municipal” Tax:
The transmission of any property is subject to “plusvalia municipal“, which is the tax on the increase of the value of the land.
The exact amount is variable, and it depends on the 3 following factors:
- The number of years you’ve been the owner of the property.
- Where exactly is the property located.
- Square meters.
An estimation of this tax should be directly obtained from the Town Hall.
2) Capital Gains Tax:
Capital gains obtained as the result of the sale of a Spanish property are taxable in Spain.
In general, net gains shall be calculated based on the difference between the transfer value and the cost price of the property, and it will be taxed at a tax rate of 19%.
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
The cost price consists of the real cost price of the property involved, plus all costs and taxes arising, excluding interest, paid by the transferor.
This cost price could be also increased with any investments made in the property. Please note that these investments should have supposed an increase of the surface of the property or an increase of its useful life to increase this cost price. Therefore, is important not to confuse these with ongoing annual maintenance costs, which would not increase in any case the cost price.
- Examples of improvements are: glass curtains, double-glazed windows, parquet, marble floor, extension to property (outbuilding), tennis court, swimming pool, private lift.
- Examples of maintenance costs are: repainting over flaky paint, plumbing, debugging, tennis court green mold cleaning, swimming pool pump replacement, annual lift maintenance.
Furthermore, according to personal income tax law,non-resident purchasers who acquired a property located in Spain from a non-resident in the Spanish territory who operate without a permanent establishment here are obliged to withhold from the purchase and sale price agreed the amount of 3% and to pay the said amount to the tax authorities on account of the possible capital gain tax of the seller.
For the seller, this withholding acts as a payment on account of capital gains tax arising from the transaction, so the seller can deduct this from the tax to be paid as a result of the tax arising from the capital gain. Should the amount retained be greater than the tax liability, it is possible to obtain a refund of the difference.
Other costs to have in mind will be Estate Agency commission, legal and Notary fees (1% each aprox.), Certificate of Energy Performance fees (€80 – 300€ depending on the type of property) and Mortgage cancellation costs, if applicable.
What if the seller is a Spanish resident for tax purposes?
If you are a tax resident in Spain and sell you current home and invest in a new one within a two-year time period you will be exempt from paying capital gains tax under one condition: that the home you sell is your “main” home, meaning you have resided here full-time for a minimum of three years.
Other exemptions from capital gains tax is any person over the age of 65 who sells their “main” home, and non-Spanish nationals who are considered tax residents in Spain who can provide a certificate from the tax authorities proving this status.
Steps to complete the sale
- Engage an estate agent
Before starting the sale process of your home you will need to enter into an engagement contract with an estate agent that includes pacts such as the commission the agent will receive from making the sale, duration of the contract and so on.
- Reservation or Option to Buy contract
Once the seller and the buyer have reached an agreement a contract will be signed containing the price, the date the sale will need to be completed by, at what point the buyer will take possession and other conditions.
At this point the seller will take the house off the market and the buyer will make a payment to secure the purchase. This installment will usually be discounted from the final amount.
- Title deed
Both parties and their legal representation (if any) will meet with a Notary public to sign the final documents and complete the transaction.
The Notary public will serve as witness and be held responsible for making sure the property is legal. On the same day as this meeting the remainder of the final amount is usually paid..
Our top tips
We strongly recommend you work with a lawyer throughout the entire sale process to help guide you every step of the way and make it as hassle-free as possible. They will likely advise you to do the following:
- Make sure you are up-to-date on all payments and debts relaying to the property, as the buyer will surely ask for proof of this due to the law in Spain being that all debts will be passed on to the buyer of a property.
- Prepare answers for any questions you suspect the buyer may have, such as documentation, utility and maintenance costs, and so on.
- Use a lawyer!
If you are considering selling your home in Spain and need a lawyer, the Premier Law team would be happy to help.
Please contact us at email@example.com or +34 952 764 483.