Which costs are charged to the seller of a property?
Texto: Anja Sämann-Gutschick y Armin Gutschick
If a resident or non-resident sells his Spanish property, this may mean he has made a profit and capital gain which he has to pay taxes on.
In principle the seller has to pay a capital appreciation tax (“Plusvalía municipal”), unless another agreement has been made with the buyer. Such an agreement is however, according to the latest case law, only valid under certain conditions. Moreover, the seller has to pay tax between the acquisition and transfer of the property (“state capital gains tax”) if there is any financial advantage. According to the Income Tax Act (IRPF) this is treated as income and added to his other earnings.
There are thus two completely different taxes for taxation of capital gains or capital gains from real estate:
• The state income tax, which taxes income from the sale of land and – if any exist – on it erected buildings.
• The municipal “Plusvalia” which taxes the increase in value of urban land, without taking into account any existing buildings.
Due to the tax advantages when purchasing prior to 31.12.1986, the taxation of capital gains is lower, the longer ago the acquisition. With Plusvalia however, the longer ago the transfer of the property to the owner was, the higher the tax, although only the last twenty years are taken into consideration.
Spanish (state) income tax
With the state income tax you have to distinguish between residents and non-residents.
For non-residents in the Balearic Islands, the current tax rate on capital gains is uniformly 21%. For residents, the current tax rate for capital gains of up to 6,000 euros is 21%; between 6,000 euros and 24,000 euros; and 24,000 euros 24% to 27%.
If a non-resident transfers a property situated in the Balearic Islands, the buyer is obliged to pay an amount equal to 3% of the final sales price within one month after certification of the purchase contract. This has to be paid for the benefit of the seller via the tax office using the appropriate form and the seller is given the appropriate evidence. If the seller hasn’t made a profit on the sale, the tax office at the request of the seller pays back the paid amount or a partial amount after deduction of possible tax liabilities.
Capital Appreciation Tax - “Plusvalía municipal”
Generally any transfer of urban land, which is subject to the property tax (IBI), is taxed on the appreciation in value of urban land, “Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana”, simply called Plusvalia.
The basis of the tax is the value added to urban land. When you purchase a piece of developed land with buildings these don’t count, only the piece of land does. The actual increase in value
during the last twenty years prior to the transfer is taxed. The municipality calculates the exact amount of the Plusvalia-tax based on the so-called “Valor catastral”, the cadastral value. This land registry value can be retrieved from the previous year’s respective property tax notice.
The notaries are obliged to submit a list, to the appropriate local authorities, of all the public documents they notarized, in so far as these legal transactions are relevant to the Plusvalía-tax. Without the buyers or sellers proper application to the municipality on the calculation of Plusvalia, the appropriate land registry will nowadays not make a registration of the new owner.
If the seller of the property is a non-resident, the local authorities can collect the Plusvalía-tax directly via the buyer of the property. As a result of this legal situation the local authorities can make the buyer liable, even if he was not explicitly required to take over the payment of tax in the notarial certificate of acquisition.