Do I Need To Pay Capital Gains Tax In Spain?

Published on 15/06/2010 in Your Spanish Home

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.

The law in SpainThis 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. 

Written by: White & Baos Lawyers

About the author:

White & Baos is a law firm established by Spanish and UK lawyers, and is regulated by the Law Society of England & Wales as well as the Spanish regional equivalent, the Colegio de Abogados in Alicante.  They are one of Eye on Spain's few recommended lawyers.

Calle Diana No. 19. 2º-D, 03700 Denia, Alicante
Tel.: +34 966 426 185
Fax.: +34 965 784 471

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richard said:
15 May 2013 @ 17:29

If I sell for less than I paid does the buyer have to pay the initial 3% of the selling price, because there would be no profit?

simon said:
15 June 2010 @ 21:33

What about cost of improvements to the property, extensions, swimming pool etc can that be put against the tax?

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