Capital Gains Tax on Property

How Capital Gains are Calculated

Capital gain is the difference between your sale price and your acquisition cost. But both figures can be adjusted to reduce the taxable gain.

Acquisition cost includes: purchase price, notary and registry fees, property transfer tax paid, and legal fees when buying.

Sale costs that can be deducted include: real estate agent fees, legal fees, plusvalía tax, and energy certificate costs.

Improvement costs (renovations that increased property value, not repairs) can also be added to the acquisition cost if you have documentation.

Tax Rates

Non-residents (EU/EEA): 19% flat rate on the capital gain.

Non-residents (non-EU): 24% flat rate on the capital gain.

Spanish residents: Progressive rates from 19% (first €6,000) up to 28% (gains over €300,000). Included in your annual Modelo 100.

The effective rate for residents with moderate gains is often lower than for non-residents due to the progressive structure.

The 3% Retention

When a non-resident sells property in Spain, the buyer must withhold 3% of the sale price and pay it to the tax authorities within one month.

This is an advance payment on your potential capital gains tax. The buyer pays it using Modelo 211, not you.

If your actual tax liability is less than 3% of the sale price, you can recover the difference when you file your capital gains declaration.

Filing Requirements

Non-residents must file Modelo 210 within 3 months of the sale. Miss this deadline and you risk losing the 3% retention.

Residents include the capital gain in their annual tax return (April-June following the sale year) through Renta Web.

You'll need the original purchase deed, sale deed, proof of improvement costs, and evidence of other expenses claimed.

Exemptions and Reductions

Main home reinvestment: Residents can exempt the gain if they reinvest the proceeds in a new main home within 2 years.

Over 65 exemption: Residents over 65 selling their main home are fully exempt. For second properties, they can exempt gains if reinvested in a life annuity (renta vitalicia).

Properties acquired before 1995: Special reduction coefficients may apply, reducing the taxable gain.

Plusvalía Municipal Tax

In addition to capital gains tax, sellers pay the plusvalía - a local tax on the increase in land value during ownership.

This is calculated by the town hall based on the cadastral land value and years of ownership. Recent court rulings have limited how this can be charged.

If the property sold at a loss, you may be exempt from plusvalía. Check with the local town hall.