Clients who own property in Spain are often concerned about both the taxes they will pay on sale and the transfer of their funds after sale. For British clients there can be the additional worry about converting the funds into Sterling from Euros. If you are considering selling, it is a good idea to get legal advice from an English speaking Spanish lawyer early on so that you can make a decision about sale price, taxes and costs, and converting your currency.
In a number of transactions between British people, we have been able to undertake the transaction in Sterling, provided the Notary is satisfied they have evidence of the payment for the sale. Generally, the costs to the seller are the local improvement or Plus Valia tax payable to the Town Hall and any Capital Gains Tax (CGT) at 19%.
If there is a mortgage on the property which will be paid off on sale, your lawyer will ensure that the bank is available on the day of signing the deed to cancel the mortgage. All other debts such as Community of Owners’ bills, utilities etc, can be settled on the day, or retentions made to cover these costs.
For non-residents there is also a 3% retention on the sale price which is on account of CGT. The purchaser has a legal and fiscal obligation to lodge this money with the tax authority. If you have not made a capital gain and are up to date with your non-resident taxes you can apply for the return of this 3%. Your lawyer can arrange this but in some cases you may have to wait some months before the return of the funds.
If you are not able to be in Spain on the day of sale you can grant a Spanish form Power of attorney to lawyers to act for you and to sign the Notarial deed. There is still some uncertainty about the obligation to pay Plus Valia to the Town Hall when you make a loss on the sale. Each case has to be treated on its merits, as although some Town Halls are still requiring payment, some appear to accept that if the value of the land has not increased during your ownership and you have made a loss, you do not have to pay. This is where a lawyer can assist in providing advice on your particular case.
For more information contact us on 952 527 014 or email [email protected].
We are holding a series of Free Consultation Open Days at our offices in Nerja – 18th April, Mijas Costa -25th April and Coín – 26th April. Contact us for further information on [email protected] or call 952 527014.