What does capital gains tax mean?
Capital gains tax in Spain
Are you making a profit on the sale of your property? Then you are obligated to pay capital gains tax. The tax rate for non-residents is 19%. For fiscal residents in Spain the tax rate is progressive between 19 and 23%.
"I bought my property for € 85.000 and I am selling it for € 100.000. Does that mean my capital gains is € 15.000?"
No. To calculate your capital gains, you can add your registration / notary costs to your purchase price. You can also deduct some costs (f.ex. agent’s fees) from the sales price. The difference between those 2 is the taxable amount.
When do I have to pay capital gains tax?
As a Spanish fiscal resident, capital gains will be calculated in the following year’s tax declaration.
If you are not a resident in Spain, it is compulsory for the buyer of your property to retain 3% of the sales price and present it to the tax office. If you have not made any capital gains, you will be entitled to claim that 3% back. Take into account that it might take up to 10 months before you will recover the funds.
If it turns out the 3% is not enough to cover your capital gains tax, you will have to pay an additional sum.
Example: You are selling your property for € 100.000, and you have made a profit of € 10.000.
Tax to pay: 19% of 10.000€ = € 1900
Retained by tax office: 3% of 100.000€ = € 3000
In this case, you will be entitled to recover € 1100 from the Spanish tax office.
Be aware, to claim the refund of the 3%, you must be in order with the payments of your non-resident tax (for the last 4 years).