Something that both residents and non-residents in Spain must once during their life in the country. The capital gains tax is one of the main taxes you will need to pay after obtaining a profit from an economic transaction. In this article, we are going to learn how does this tax work, which are the exact percentages to be paid, and how can you benefit from the existing bonifications and exemptions. Are you ready?
What exactly is the Capital Gains Tax?
The capital gains tax is the tax that is paid on the profits that you obtain once you sell any kind of asset like a property or land, or from an investment in the Spanish territory. Whenever the sale value is greater than the price you paid for the investment/asset for its acquisition, capital gains tax will be paid on that difference, the profit.
So we are talking about one of the main taxes when selling your house in Spain.
Unlike some countries like in the UK in which this tax works independently, in Spain we find it integrated within the personal income tax (IRPF). The Spanish tax system is really complex and different from the rest, so we will try to be as clear as possible.
Let’s use an example in order to better explain how does this tax work.
Imagine that you bought a property in Spain for 500.000€. Now, after several years, you are planning to sell it. You find a buyer, and after some negotiations, you both accept that the sale price will be 700.000€, as the Spanish Real Estate market has grown and properties are more expensive now. The resulting 200.000€ that you earn is the taxable amount to which you will apply the capital gains tax percentage.
But, how much will you pay precisely in this situation?
As always, the answer depends whether if you are a resident in Spain or not.
Capital Gains Tax for Spanish residents
Just as a reminder, you will be considered a tax resident in Spain if you stay in the country for more than 183 days per year (6 months).
In that sense, if you considered a resident, the capital gains tax to be paid will be:
- 19% for the first 6.000€ obtained as a profit
- From 6.000€ to 50.000€, the tax percentage is 21%
- From 50.000€ onwards, a 23%
Remember that this percentage will be applied to the difference between the price you paid to purchase the property (or any other asset) and the one you receive when you sell it.
Do you have any doubts so far? Ask our lawyers anything (or continue reading for more information):
Bonifications and how to avoid Capital Gains Tax
Let’s start now with the information you are more interested with. There are two different situations in which you won’t need to pay this tax, and one in which you will need to pay just a reduced percentage. Let’s go over them briefly.
1. The main home exemption
If the amount of money that you earn from the sale of the property will be reinvested into the purchase of a new one, and you will use this new house or flat as your new home, you don’t need to pay capital gains tax.
That simple. This is what we call the main home exemption.
Hence, what you need to consider here is that the property you are selling was your habitual residence, and the one you are acquiring will be too.
Nevertheless, there are some requirements here. It is crucial that this property is located inside Spain and not outside for the exemption to be applicable.
2. Capital gains tax in Spain over 65 years
There is an even better situation than the one in the prior section for those wanting to save taxes.
If you are 65 years old or over, it does not matter if the amount of money you get from selling the property will be reinvested into your new home or not. You won’t need to pay this tax.
There is no denying then that if you are close to that age, it is much better to wait until you are 65 in order to conduct any asset sale.
Nevertheless, you must bear in mind that there is a crucial condition you must meet in order to benefit from the 65-year-old exemption. And that is that the property you are selling must be your habitual residence. In order words, a minimum of 3 years lived in the property before selling it is required in order to avoid paying capital gains tax.
3. Reduction on assets bought before 1995
If you bought the property you now want to sell before 1995, lucky you. You can enjoy a slight tax reduction.
This means that all the properties that were acquired until December of 1994 will be eligible for this bonification. Nevertheless, there are two things to consider:
- The bonification will be only applicable to the gains produced until January of 2006. Any increase in the asset value afterwards won’t include the tax reduction and will be taxed at the normal rate.
- In order for the property or asset to enjoy this bonification, it must have been purchased for more than 400.000€
Then, if the property or asset you want to sell meets these requirements, which is the exact reduction you will enjoy? An 11% on properties, 25% in company shares, and 14% on all the other assets.
Capital gains tax in Spain for non-residents
So far we have seen the situation for those staying in the country for more than 183 days per year, including the bonifications and reductions. But what happens to the non-resident taxpayers in Spain in regards to this tax?
Well, they are not that lucky.
Non-residents in Spain from outside the European Union will pay a fixed 24% rate for their capital gains tax. Nevertheless, if they are from any other European country, from Norway or Island, that rate is reduced to just 19%.
Are there any reductions or exemptions for non-residents?
The answer is yes. But unlike the resident case, here there is only one possible way.
Non-residents can enjoy a capital gains tax exemption as long as they are legally living in any other EU country that has a tax agreement with Spain. If that condition is met, they can also enjoy the various exemptions that are available to residents in Spain.
Which are the assets that are liable for the Capital Gains Tax?
As we have previously mentioned, properties are not the only assets liable for the capital gains tax.
This tax applies mainly to company shares, buildings, lands, flats and houses, government bonds, and precious metals, among other assets and investments.
Capital gains tax calculator Spain
Would you like to easily compute your capital gains tax in Spain?
Then you need to follow the following formula as a basic capital gains calculator:
(Sales price – purchase price) x 19%
Where the sales price will include the value of the property + furniture in case you have the corresponding invoice and proof that demonstrates its value.
Example: This example highlights the financial and tax differences between selling a property with and without furniture in Spain. The calculations show how the absence of valid documentation for furniture can impact the capital gains tax, making it essential for sellers to retain all relevant paperwork to potentially reduce their tax liabilities.
| Property Sale Including Furniture | Property Sale Excluding Furniture |
|---|---|
| Unable to justify the furniture cost due to the absence of invoices or any other supporting legal documentation. | The seller retains original purchase invoices for the furniture, ensuring it is not subject to taxation in Spain. |
| Total sales price: €250,000 (€190,000 for the property + €60,000 for the furniture) | Total sales price: €190,000 |
| Taxable capital gain in Spain: (Total Sale Price – Initial Purchase Price) x 19% = (€250,000 – €150,000) x 19% = €100,000 x 19% = €19,000 |
Taxable capital gain in Spain: (Total Sale Price – Initial Purchase Price) x 19% = (€190,000 – €150,000) x 19% = €40,000 x 19% = €7,600 |
Let us optimize your taxes!
Now you know the rules of the game. Nevertheless, you may still find it difficult to solve the puzzle.
There are several rules and exemptions regarding all the taxes you need to pay in Spain as an expat, and knowing them all can be nearly impossible. That is why we want to make your life easier.
Our tax lawyers are specialized on expat taxes. They will analyze your situation, answer all your doubts and manage all your taxes so you can pay just what you should.
We want you to focus on enjoying your life in Spain without the need to worry about the boring part. Let us do that for you!
Book a consultation with one of our lawyers and solve all your doubts:
Hello!
We are a swedish couple that have sold our property in Alfaz del Pi (Alicante), 24/05/2019
We bought a new property in the same region 24/04/2018.
We are not resident.
Regarding capital gains tax.
In your description, on this site, it seems like we can do “the main home exemption”!?
But other lawyers we have asked, says No!
“If the amount of money that you earn from the sale of the property will be reinvested into the purchase of a new one, and you will use this new house or flat as your new home, you don’t need to pay capital gains tax
That simple. This is what we call the main home exemption.
“Non-residents can enjoy a capital gains tax exemption provided that they are legally living in any other European Union country that has a tax agreement with Spain. If that condition holds, they will be able to also enjoy the main home exemption too”
Hi Sara!
Yes, in that case you will be allowed to benefit from the main home exemption.
For any other doubt do not hesitate to contact us at [email protected]!
Hello,
My husband and I have been resident in Spain since February 2018. We have just sold our London flat (which was our main home till then) and we now intend to buy in Spain, as currently we’re renting. However we want time to look around and I understand we have up to 2 years to invest in another home here, is that correct? And if so, do we need to put the proceeds of the sale on the Modelo 720? We don’t want to pay too much tax! Thank you
Hi Amanda,
As your case is really specific one of our economist would have to sit down and analyze it carefully with you. That is why we would really appreciate if you could send us an email at [email protected] so we can ask you the questions that would lead to the answers you are looking for.
Thanks a lot!
Hi,I sold my main residence in UK in September2018,I moved to Spain in same month,became resident in march 2019,I invested the money in 2 properties,1 my main residence,do I have to pay capital gains tax on the sale of my UK home,thxs
In order to assess what would be your best option, it would be ideal to have a consultation with you so that one of the lawyers can advise you taking into account your case. You can send an email to [email protected]
We have been resident in Spain since October 2015 & rent out our home in UK. If we now sell that property will we be liable for capital gains tax as we are over 65. Other accounts say yes because we have not lived in the property for the last 3 years.
Hi Brenda,
Yes, they are right. The over 65-year exemption just applies in case that we are talking about your habitual residence, which is equal to those 3 minimum years that they told you. So you will need to pay capital gains tax provided that you sell the property.
For anything else you may need, we are here to help! 🙂
We are non resident UK citizens over 65 own only one property here in Spain.We have owned and lived in the property since 2005. If we sell are we liable for capital gains tax. We pay non residents taxes.
Hi Coral,
That will depend on the country in which you have your habitual residence: there may be an exemption provided that Spain has any convention with that country. For that, we would need to analyze your situation in more depth. Would you mind sending us an email at [email protected]?
Thanks a lot!
I recently became in Spain. I have some company shares in the UK, some of which are in an ISA (therefore not liable to UK CG tax). Would I have to pay Spanish CG tax on those shares if I sold them and made a capital gain? Thanks!
Hi Mike,
That will depend on whether you are a resident in the country or not. If you would like us to check it specifically, please send us an email at [email protected] providing a bit more details of your current situation.
Thanks a lot!
Due to ill health problems, bought a property in 2018 to live in and put our house of 16 years up for sale, we have just sold it 2019. My husband is 65 years old. Do we qualify for any exemptions on Capital Gains Tax. We changed our Padron in April this year before we sold does this make any difference? we have been residents for over 16 years.
Hi Mary,
As you can read in the article, as your husband is 65, he does not need to pay capital gains tax on the gains obtained.
How will Brexit affect the amount of tax I will have to pay when selling my apartment in Spain. Also if I am selling before three years and I am a non Spanish resident will I need to pay a higher rate of tax.
Can you also please deduct all the tax payable on an apartment selling at 230.000 euros for instance please?
Thank you!
Hi George,
Unfortunately, there is yet no certainty about what will happen after Brexit. The tax you will pay will depend on the amount you sell it for.
If you still have any doubt, do not hesitate to contact us so our tax lawyers can get in touch with you.
Kind regards!
We have been told that because we bought the new home before selling our home of 16 years that my husband would not qualify, as the new home becomes his habitual home.
In that case, we would really appreciate if you could send us an email at [email protected] so the specialized tax lawyer can carefully analyze your situation and give you an answer, as we will need to check it in more depth. Thanks!
Hi,
My question is we have been Spanish resident since 2013
We own a property in uk planing to sell ,we purchased it
February 1986 for £50000 now selling it for £500000
what is the capital gains tax implication ,thank you
(I am over 65)
Send us an email at [email protected] and our accountant will help you out! 🙂
Hi,
I inherited a 1/4 part of my grandfather´s house in Ireland.
It was valued in total at 300,000 euros
I declared my part using modelo 720. Last year we sold the house at a price lower than the original valuation (140,000)
Do I need to declare this in my declaración de la renta?
Will I be paying capital gains on this?
Is there any other form I need to complete other than the declaracion…Thanks!!
Send us an email at [email protected] with all that info and one of our tax lawyers will get back to you with an answer as soon as possible! 🙂
Hi, we have sold our house in Spain at 152,000€ after fees. When we bought our home in 2005 we paid 85,000€. We did spend around 25K in modernisation etc, but on paper it shows we made a profit of 67,000€. We are in the process of buying a house at 101,000€ in Spain. We have been told the CG tax is paid on the amount we are NOT investing from our total sale price, eg 51,000€. Is this correct as we have invested more than the 67,000€ profit as the house is costing us 101,000€?
I am a tax resident in Spain. Do gains in accounts that were considered tax free in other countries when I lived there, e.g. premium bonds and ISAs I hold in the UK or a tax free savings account I have in Canada need to be declared in Spain? ie do they lose their tax free status now I am resident here? Thanks, Andrew
In order to assess what would be your best option, it would be ideal to have a consultation with you so that one of the lawyers can advise you taking into account your case. You can send an email to [email protected]
Hello, I have just read your article and am unsure as to our situation. We bought our UK house over 25 years and lived in it for several years but now live in Spain where we are resident. We wish to sell our UK house in order to buy a house in Spain. We are currently living on a plot of land in the countryside. We consider our UK house to be our principle property but will the tax authorities here in Spain see it that way?
In order to assess what would be your best option, it would be ideal to have a consultation with you so that one of the lawyers can advise you taking into account your case. You can send an email to [email protected]