VIEWING AND BIDDING

The solicitor contacts the vendor’s legal representative and gathers all pertinent documentation for the property and checks that all permits and licenses from the municipality are in order and that there are no outstanding debt, mortgages, costs, tenants and taxes pending for the property.

In Spain, the last step in a property purchase is at a notary office. It is a formal act and both parties, both buyers and sellers, either with their solicitors or the solicitors on their own with a power of attorney from their clients, meet with the notary to sign the title deed. In the same act, the buyer pays the remainder of the agreed sales price to the seller and the seller hands over the keys of the property to the buyer. From this moment on, the buyer is the rightful owner of the property. The title deed must be signed by three parties: the seller, the buyer and the notary.

 Vendor taxes and expenses selling its property are detailed below:

Plusvalia (Capital Gains Tax).

It means increase of the value of Urban Land that you own. It is a council tax based in the plot cadastral value of the property by the town hall. It´s calculated from the date you bought the property until the date you sell it. Its amount depends on the number of years you have own the property until the date of the selling of it. The law estates a maximum of 20 years, so if you own the property for longer time, the town hall will not be able to charge you more than those 20 years before mentioned.

If you have owned the property for less than 20 years, the amount of this Plusvalia tax will be based on the number of years you have owned the property. It´s worth to mention that if vendor is Non Tax Resident in Spain, this amount of plusvalia must be deducted of the final sale price by the buyer to secure its payment. The Plusvalia tax will be exempt for sale with losses that can be shown through documents (according to judgment 2499/2018 of the TS).

3% IRNR (Income of Non Tax Residents)

It is a tax relative to those vendors who are Non Tax Residents, that is those people who do not declare their incomes in Spain. This percentage is calculated according the selling price of the property. In the case of a Non Tax Resident in Spain, said amount must be deducted of the final sale price by the buyer to secure its payment.

 In any case the sale of a property carries with a change of capital (gain or loss) that is based on the difference between the sales price (plusvalía and costs will be deducted) and the purchase price (adding taxes and costs) and the seller must take this into account when making his income statement both in the case of being a tax resident in Spain (income tax return, form 100) or in the case of being a non-resident (IRNR, form 210).

It´s convenient to make this tax forecast to avoid surprises when it comes to settling the income with the Treasury since its settlement and payments comes after the signing of the deeds. This declaration takes place, in the case of the tax-resident, the following tax year of the sale (April-June) and in case of non-residents it comes within four months after signing the deeds.

Non-residents should remember that the before mentioned 3% payment entered with form 211, will be credited on form 210 and the surplus will be entered into the Tax Agengy in case the tax exceedes that amount withheld. Conversely, on form 210 the amount is returned in full if the sale is made at a los or partially if the sale is made at a lower profit which generates a minor tax liability after withholding tax.

Agency fees

The agency commission for the entire sale process are usually 5% + VAT (21% of the 5% before mentioned) calculated according the final sale price.