In Spanish, real estate capital gains are referred to as “ganancia patrimonial.” It is a tax paid by the seller or the buyer (in the case of a non-resident seller) who makes a profit from the sale of real estate. This gain can result from various transactions, such as property sales, donations, or property transfers.
Note: This should be distinguished from “plusvalía municipal,” a local tax that taxes the increase in the value of urban land in real estate transactions.
Calculation of Capital Gains
To calculate the amount of capital gains, the following formula should be used:
Profit or loss on capital = selling price - purchase price
Purchase price:
This is the sum of the property price (stated in the authentic deed) and all costs and taxes related to the purchase (appraisal costs, notary fees, lawyer fees, broker fees, performed works, depreciation in case of property rental, property taxes, etc.).
Selling price:
This is the sum of the selling price and all costs related to the sale.
Taxation on Real Estate Capital Gains in Spain
If you are considering selling real estate in Spain, here are the tax rules you need to be aware of.
What you need to know about this tax?
The tax rate for capital gains is progressive and varies depending on various factors:
- Dependent on tax residency.
- Dependent on the amount of capital gains.
As a reminder, someone is considered tax resident in Spain if that person:
- Resides in Spain for 183 cumulative days per year.
- Has personal or professional interests in Spain.
Tax on real estate capital gains for tax residents in Spain
The capital gains must be declared in the Individual Income Tax (IRPF) return. For more information on this tax, read our practical guide on IRPF.
Here is the rate schedule for 2023:
- For the first €6,000 of profit: 19%
- €6,000 – €50,000: 21%
- €50,000 – €200,000: 23%
- €200,000 – €300,000: 27%
- More than €300,000: 28%
Tax on real estate capital gains for non-residents
The rate is 19% for European Union residents who must declare it under the Non-Resident Tax.
We want to draw your attention to the payment method: to prevent capital flight, Spain has a withholding system at the time of signing before the notary if the seller is a non-resident. 3% of the tax is withheld from the buyer. This amount must be transferred to the Agencia Tributaria within a month. The seller must pay the remaining 16% within three months.
Exceptional cases
For the main residence:
When selling the main residence, gains are exempt from tax if reinvested in another main residence within two years.
It is fully exempt for:
Property owned by individuals over 65 years old.
Individuals in a situation of severe dependence or severe disability.
Our advice: to know the amount of your real estate capital gains, contact the tax authorities or your tax advisor. J’achète en Espagne can recommend reliable experts. Contact us.
And for more information, we recommend reading our practical guide: “The sale of real estate in Spain.“
