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say I buy land for 50,000
and I build a villa for 50,000
and I sell the villa for 200,000:Taking that the “Esrcitura” says I bought it for 50,000
does that mean I get charged capital gains on 150,000 profit?or do they take into account that I spent 50,000 to build it and I get taxed on 100,000 profit?
If so how do I prove and show what my construction costs were, if I physically build it myself. Can I add my labour hours as a cost?
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Of course the capital gain will be charged on the real profit of 100.000. You can prove you’ve spent the amount of 50.000 in building by showing all the invoices you’ve received and paid related to the building. Before selling the Villa it’s better to make the “Escritura de obra nueva”, where you go to the notary and with some Architect documents you can say that the cost of the building is 50.000. This Escritura is taxed at fixed rate of 1% on 50.000 (so, 500).
Just the very important thing. If you are non resident in Spain, you won’t be charged at a 15% rate. If the sale is considered a capital gain the rate for non resident people is 35%, if it’s considered parte of an economical activity you usually do the rate is 25%.
Francisco José Vinaches Soler
franciscojvinaches@dig.es
DiG AdvocatsDiputació, 260. 5ª planta
08007 Barcelona
Tel: +34 933 184 400
Fax: +34 934 122 726
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Sven, you can’t deduct your work as an expense even if you are builder. Notice that if you could deduct your work as an expense you’d give an income for the remuneration you’re supposed to receive for you work. So the same amount in expense and income is zero.
You’re going to be taxed at a 25% fixed rate on the profit of building and selling the villa.Francisco José Vinaches Soler
DiG Advocats
Diputació, 260. 5ª planta
08007 Barcelona
Tel: +34 933 184 400
Fax: +34 934 122 726
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