If you are thinking of buying property in Spain, either for holiday or retirement, understanding how the Spanish property market works is important before you make any decisions. The Spanish government offers a range of incentives to foreigners who decide to invest in Spanish properties. For example, if you are a non-EU resident you can own an apartment in Spain with no restrictions or bureaucratic hurdles. By owning property in Spain you can benefit from lower income taxes, generous tax breaks and produce status within your new community.
If you have been living in Spain for some time, rental income from a property can be used as a legitimate deduction against your CGT liability. In addition, if you have been renting out a property, you can offset this income against any fall in capital value of the property on a yearly basis. Under Spanish tax laws, a loss on the sale of a principal residence would also be exempt from paying tax. However, the new CGT rules have changed the way these profits on sale are taxed.
Paying tax is not an enjoyable experience for anyone. You might be thinking that you could avoid paying tax when you sell your house in Spain. If you’re like most people, however, you will probably need to pay some tax on the sale of your home in Spain (unless it is your primary residence). Even if you are able to avoid paying tax, there are still some documents you need to submit when selling the home even if you don’t owe any money.
This article addresses the popular question “Do you have to pay tax when you sell your house in Spain?” There are a lot of myths spread out on the Internet which makes answering this question often difficult. In reality, real estate sales between private individuals in Spain are taxed differently depending on a number of factors.

Do you pay tax when you sell your house if you’re a non-resident?
For non-residents, the tax burden can be prohibitive. The Tax Authority withholds 3% from the sale of your property. This is taken directly from the purchaser so you only receive 97% of the amount the property was sold for. The 3% is a safeguard so that non-residents do not ‘disappear’ before they have settled their CGT account.
If you do not have to pay CGT, you will get all of your money back. However, if more is required, you will need to pay the extra. In order to collect any refund, you must submit form 210H within three months of the sale, along with the last four years of non-resident income tax returns. From the date that you present the documents, you should allow around a year to receive your refund.

What about when you’re a resident?
If you are a Spanish resident, after selling your house or apartment, you are allowed to subtract €250,000 from your total income to encourage selling homes. After subtracting €250,000 you are taxed on the remaining amount at 18%. If you are selling an investment property in Spain, located in another country than where you reside, you may be able to deduct the costs of acquisition and also the costs of maintenance depending on which country this is in. You can then choose if this is taxable or deductible.
• Whether you decide to sell your home or stay, Malaga is one of the best places to live in Spain. If you are over 65 years old and have been living as a tax resident in the same permanent home in Spain for more than three years, then you are exempt from paying Spanish capital gains tax on the property.
• You may also be exempt from paying CGT if you have been a fiscal resident in Spain for three years and reinvest your money from your principal home in another principal home. However, you must continue to live in this new property for the next three years. The property you buy can be in any member EU state, but you must reinvest all the money. If you do not then you will be liable to capital gains tax on the profit when you sell your home in Spain after five years.
• The Spanish Tax Authority has developed a procedure to deal with this problem. If you haven‘t quite made the three-year threshold and there is a compelling reason why you have to sell, the Spanish Tax Authority will take this into account. So, for example, if you have a medical issue that means you can no longer manage to live in a high-rise property, or if you have to move because of work-related reasons, then the Spanish Tax Authority will take this into consideration.
Whether you are looking for property to buy or property to sell, Country Wide Properties is the first choice for property services in Spain . Our dedicated team of local professionals have chosen to work with us because they know our first priority is providing the best service possible. With over 40 years' experience in the industry, we have developed our own way of working. Our processes are designed to ensure that buying and selling a property abroad becomes an enjoyable experience.
What happens if I’ve made improvements to the property?
If you have owned a property in Spain for a few years, you have probably noticed how prices have increased. In some areas of Spain, properties now cost up to 10 times as much as they did just a few short years ago. This is obviously great news if you are selling your home or buying another one, but it can be bad news if you have made substantial improvements to your property and now want to sell it. Once you've got the back garden how you like it, congratulations! It's time to apply for the correct building licences and record them properly at the Land Registry. The last thing you want is to be trying to sell your home and then discovering that your patio is actually out of bounds because you built too much and didn't get planning permission. There are two taxes for real estate, one is the property tax that is calculated based on how much your property is worth. The other is the capital gains tax that has to do with the selling of the property. When you sell a property you have to register your sale at the Ministry of Finance. Let's say you work with an agent who only sold 10 properties last month. Curious how much the government will be taking out of your pocket when you sell your place next month? Well, he can easily figure this out for you, but you will have to understand the process yourself first.

Wants to know more about Spain property tax details and other property related queries. Contact us today - www.makoo.com .