Selling your property: legal considerations and tax issues

By Velasco Lawyers

Setting the sale price

There are many ways to estimate the value of a property. The most reliable way is to ask for a report from a valuation company. The certificates that you receive are especially practical for determining the price of properties not only for selling. Alternatively you can check the sale prices of similar property in the same area or get advice from an estate agent.

Costs of selling a property

As the vendor you will have various costs to pay when you sell your property:  

• Plusvalia or municipal Capital Gains Tax – This is calculated by the town hall and is based on the increased value of the land since it last changed hands.

• Estate agent, lawyer, notary and other professional fees – These will have to be included in the private sales purchase contract; normally real estate fees and municipal plusvalia are paid by the sellers. The payment of other professionals can be agreed between parties.

• Capital Gains Tax – You also have to pay Capital Gains Tax on the difference between the amount that you bought the property for and the amount that you are selling it for. Since the 1st of January 2015 the way to calculate Capital Gains Tax has been simplified.
Inflation indexing has been removed and abatement coefficient will be applied only for the first 400,000€ of capital gain (abatement coefficients can be applied only to properties purchased before 1995). Capital gain is therefore the difference between sale and purchase price reduced by the costs inherent to the purchase and sale (real estate fees, notary, taxes, etc…)

• Capital Gains Tax for non-residents – In 2015 Capital Gains Tax will be 20% of capital gain.
This will decrease to 19% if the sale is in 2016. Of this amount non-residents will have to pay 3% of the purchase price directly to the tax office at the time of the signing the sale deeds.
The buyers retain this amount (3%) from the sales price and pay the tax office by completing   Form 211.  
In case this amount is higher than the Capital Gains Tax you can ask for the difference back by filing in Form 210.
Your lawyer will be able to advise you on this procedure. You should keep in mind that your yearly non-resident’s tax has to be paid up to date when selling your property.

• Capital Gains Tax for fiscal residents – For fiscal residents, Capital Gains Tax will be regulated by income tax according to the following table: