We were recently approached by a lady who decided to ask us about selling her property in Spain that she had owned many years, but as a non resident.
Capital Gains is a tax calculated on the difference between the purchase price of the property on the deeds and the sale price of the house now. She will be taxed on any gain but some expenses can be deducted but they must be evidenced by legal invoices.
The lady needs to find the invoices or receipts for the payment originally of Notary Costs, Land Registry Costs, Purchase Tax Certificate. Plus any invoice of Solicitors or Gestoría office who dealt with the purchase. The amount left after valid deductions is taxed. What happens for a non resident is that 3% of the sale price is retained at the Notary.
The Tax office will (after some time) return any difference, after inspecting taxes owed in Spain. If the Capital Gains Tax amount is more than what is retained this needs to be paid in the months after the sale.
Plusvalía Tax is a town hall tax paid when a property changes hands. Based on the increase of the value of the land on which the property sits. It varies depending on the area and amount of years accrued. It is only paid when ownership changes (probate, sale, etc.)
In addition the council tax (SUMA or IBI) will need to be paid up to date
Our lady, before putting the property for sale, needs certain paperwork as below, which her solicitor will help her with:
With the above, we can obtain an up to date extract from the Land Registry to check the situation of the property. And then advise on the way forward with contracts. Also with the more complicated paperwork, as below:
In addition in the Valencia Community there is now a confusing new issue called Derecho de tanteo y retracto.
This new regulation states that the region of Valencia is entitled to exercise the right of first refusal and withdrawal. This is for any property transaction made within the region.
• If a house was bought before 21/04/2005, an owner need do nothing.
• Then if a house was bought after 21/04/2005 and it was not owned by a bank, the owner needs a certificate from the Land Registry Office to prove it.
• And if a house was bought after 21/04/2005 and it was owned by a bank, the owner needs to apply for the authorisation from the government of Valencia
A solicitor will help with all of this, but it is important to have someone who knows what they are doing. Otherwise a lot of problems could arise on completion. They will help coordinate all the paperwork, liase with buyers, seller and the agent and ensure that all is completed correctly. Also paying the relevant taxes, and applying for a refund of the 3% retention for a non-resident.
We can of course assist with selling a property in Spain and with all advice on this issue.