Q: I am selling my Spanish house do I need to pay Capital Gain Tax? Is there any difference if I am Tax Resident or Non Tax Resident in Spain?
A: In order to know if you will have to pay Capital Gain Tax (CGT) (Ganancia Patrimonial) the first thing that needs to be checked is whether or not you had a gain (profit) in the sale.
This means that the acquisition cost/value (price, taxes, notary fees, land registry fees, and other costs e.g. legal fees that you paid when you bought the house) is less that the transmission costs/value (selling price, less plusvalia, , agents fees, etc that you paid when you sold the house).
Please notice that the acquisition cost/value must be up dated as per the coefficient approved each year, and there are also special rules that apply if you have purchased the property before 31/12/2004.
The Capital Gain Tax (CGT) that should be paid will be different between a Tax Resident and a Non Tax Resident in Spain as per the following:
1.- If you are Non Tax Resident in Spain, you must know that the Income Tax Law for Non Residents (RD 5/2004) article 25.1.f) has been modified by means of the Law 26/2009 of 23rd of December, therefore for the year 2010 the CGT has been increased from 18% to 19%.
2.- If you are Tax Resident in Spain, please remember that the Law 22/2009 of 18th of December has changed the CGT for Residents (Law 35/2006) being now 19% (up to 6.000€) and 21% (from 6.000,01€ onwards).This applies for the whole country of Spain except some communities like Basque Country, etc.
But as a Tax Resident in Spain please bear in mind that there are also some important exception of this tax.
RE-INVESTMENT IN ANOTHER HABITUAL/MAIN RESIDENCE: as per the article 38 of the Law 35/2006 if you reinvest the proceeds of the sale of your habitual residence in the acquisition of a new habitual residence, you will not pay CGT.
In this point it is relevant to remember that as per the R.D. 439/2007 article 41, the funds must be reinvested within 2 years from the sale and as per the article 54 it would be considered as habitual/main residence if it has been used as residence for at least 3 years.
WHEN THE VENDING PARTY IS ABOVE 65 YEARS OLD: as per the article 33.4.b, of the Law 35/2006, when a person over 65 years old sells his habitual residence no CGT will be paid. (No need to reinvest the funds in the purchase of a new habitual residence.
Should this be your case or the case of someone you know, we will be more than pleased to assist you.
*The information provided on this article is not intended to be legal advice, but merely conveys general information related to legal issues.