Capital gains tax mitigation on selling (or gifting) property in Spain

Author: Spanish lawyer Raymundo Larrain Nesbit Raymundo Larraín Nesbitt
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Are you selling (or gifting) property in Spain? In this taxation article we explain how our law firm can assist you bring down your seller’s taxes significantly, even negating them.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

The following article has been summarised to avoid unnecessary tax technicalities. The quoted tax rates are subject to change from one year to the next. Seek professional legal advice on your matter – see disclaimer below.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of May 2019

Introduction

Congratulations, you have found a buyer for your Spanish property!

On selling property in Spain, you are liable for two taxes: plusvalia and capital gains tax (CGT, for short). For a more detailed take on both, please read our in-depth tax article: Taxes on Selling Spanish Property.

In this short article, we will focus on four strategies to mitigate a seller’s exposure to CGT; which range from completely negating it, to reducing it significantly.

Four strategies to mitigate a seller’s CGT liability

  1. Absolute relief

All tax residents over 65-years-old are exempt from paying CGT on selling their main abode (vivienda habitual, in Spanish legal jargon).

  1. Rollover relief

Any resident seller under 65-years-old is exempt from paying CGT on selling their main home providing the following conditions are met:

  • Seller is under sixty-five year-old.
  • Seller is (tax) resident in Spain.
  • Dwelling must be his main home (main abode and must have dwelled in it permanently for the 3 previous years). It may be less than three years under exceptional circumstances i.e. job change, marriage or separation.
  • Sales proceeds reinvested in a new main home (in Spain or else in the EEA/EU, including the United Kingdom in a pre‐Brexit world). Any sales proceeds not reinvested will be taxed pro rata.
  • 2‐year deadline to reinvest the sales proceeds (on a new main home).
  1. Pension annuities

This third tax relief is in addition to the above two main home tax reliefs. Applies to residents.

Any capital gains made by resident taxpayers over 65-years-old will go untaxed provided the following are met:

  • Sales proceeds reinvested in pension annuities.
  • Capped at €240,000.
  • Six-month deadline as from sale.
  1. Traditional method

Your lawyer can offset from your CGT liability on selling, all expenses that went towards buying the property plus any refurbishment costs, provided you have VAT invoices to back them up. Applies to both residents and non-residents.

  • Lawyer’s fees (on buying).
  • Notary fees (on buying).
  • Land Registry fees (on buying).
  • Taxes (on buying).
  • All property-related improvements (not maintenance costs) i.e. glass curtains, refitted kitchen, roof retiling, wood flooring, A/C installation, house alarm etc.
  • Estate agent’s commission (on selling): VAT invoice.
  • Lawyer’s fees (on selling): VAT invoice.

We offer the most competitive fees in the market.

Conveyancing in Spain – Selling

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Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Article also published in Larraín Nesbitt Abogados: Capital gains tax mitigation on selling property in Spain

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Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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