In this article we are going to look at the taxes that have to be paid and the most important aspects to take into account.
There are three taxes that a person has to pay: Personal Income Tax (IRPF), Property Tax (IBI) and Municipal Capital Gains Tax (Plusvalia Municipal).
IRPF (PERSONAL INCOME TAX)
If you sell your property, whether it is a house, premises or garage, you will obtain a capital gain or loss that will be determined by the difference between the acquisition and transfer values. This capital change, whether positive or negative, must be declared.
In the event that what is sold is the main residence, this may be exempt in some cases.
Here the gain is determined by the difference between the acquisition value and the transfer value.
In the case of the sale of a property, the acquisition value will be formed by the real acquisition amount, plus the cost of investments and improvements (without counting the expenses for conservation and repair), adding also the amount of the sale expenses (notary, registration, commissions…) and also the taxes that have been paid for the acquisition (ITP, AJD, ISD…) and finally excluding the interests. To all this, we must also take into account the amortisations, if applicable.
Once a positive result has been obtained, this must be multiplied by the applicable tax rate according to the resulting bracket.
The transfer value is made up of the actual amount minus the amount of expenses and taxes inherent in the transfer.
This gain is paid the year after the sale in the IRPF campaign.
NON-RESIDENT PERSONAL INCOME TAX
In this case the acquirer, whether resident or non-resident, will pay 3% of the agreed consideration as payment on account to the non-resident seller or to the seller who does not have a permanent establishment in Spain, corresponding to the gain generated, derived from the transfer.
In this case, form 211 must be filed within 1 month, which will be given to the seller in order to deduct the withholding from the tax liability resulting from the declaration of the gain. If the withholding is higher than the tax liability, the excess can be refunded.
The percentage that a non-resident will pay on the profit obtained will be 19%, while a resident will pay 19% in IRPF for the first 6000 Euros, 21% for the base between 6.000 and 50.000, 23% from 50.000 to 200.000, 27% from 200.000 to 300.000, and 28% from 300.000 onwards.
MUNICIPAL CAPITAL GAINS TAX
The tax on the increase in value of urban land (IIVTNU) is a local and direct tax.
This tax is levied on the increase in value experienced by urban land and which becomes apparent as a consequence of the transfer of ownership of the same by any title, or of the constitution or transfer of any real right of enjoyment, limiting the ownership, over the aforementioned land.
This tax is payable at the time of the sale in this case and the deadline for payment is 30 working days.
This tax depends on the regulation of each municipality so that we will find different tax rates and different tax benefits, being able to choose the method by which you want to liquidate it, either the real method (which takes into account the real increase produced) or the objective method. It must be taken into account that the objective method has increased a lot from 1 January 2023 as the coefficient applied to make the calculation has increased up to 50% in some sections.
PROPERTY TAX (IBI)
This is a municipal charge that is levied on the value of properties according to their cadastral nature.
Although the payment of this tax is divided into instalments, it is paid annually, so that in a sale or purchase, the one who is obliged to pay is the owner on the first day of the year (which is when the tax is due), although the latter may claim the proportional part from the buyer, unless otherwise agreed.
It is therefore important that the seller and buyer pay the proportional part of the year, by means of an agreement between the parties.
These are some of the aspects that must be taken into account when selling a property. We are at your disposal to advise you on everything.