Capital Gains Tax in Spain: Comprehensive 2025 Guide on Rates, Exemptions, and How to Avoid It

Capital gains tax in Spain is a tax levied on the profit made when selling certain assets, such as real estate, stocks, or other investments. The tax applies if the sale price exceeds the original purchase price, with the difference considered the capital gain. Both residents and non-residents are subject to capital gains tax in Spain, but different rules and rates apply depending on tax residency status. For residents, the tax is progressive, while non-residents generally pay a flat rate on assets located in Spain.

In 2025, the capital gains tax rates for residents in Spain are progressive:
👉 19% on the first €6,000 of gains
👉 21% on gains between €6,001 and €50,000
👉 23% on gains between €50,001 and €200,000
👉 27% on gains between €200,001 and €300,000
👉 30% on gains exceeding €300,001

For non-residents, the rates are generally flat:
👉 19% for EU/EEA citizens
👉 24% for non-EU/EEA citizens

This tax applies only on the gain (profit), not the full sale price. Certain deductible expenses such as renovation costs, legal fees, and commissions can reduce the taxable gain.

Residents in Spain are taxed on their global capital gains, meaning any asset sold worldwide—including property in other countries like the UK—is subject to Spanish capital gains tax. Non-residents, however, only pay capital gains tax on assets located in Spain, such as Spanish real estate. Residents face progressive rates ranging from 19% to 30%, while non-residents pay a flat rate (usually 19% for EU/EEA nationals). This distinction is important for those who own property both in Spain and abroad, especially UK property, to understand their tax obligations accurately.

For Spanish tax residents, capital gains realized by selling UK property must be declared and taxed in Spain, as Spain taxes residents on their worldwide income and gains. Spain does offer mechanisms to avoid double taxation, such as tax credits for UK capital gains tax paid, under the Spain-UK double taxation agreement (the amount of tax already paid in the UK can be deducted from the Spanish capital gains tax liability, preventing the taxpayer from paying tax twice on the same gain). Non-residents in Spain with UK property are not subject to Spanish capital gains tax on those assets, only UK tax rules apply. This is a key consideration for UK nationals or other foreigners living in Spain who own property in the UK.

✔️ Capital Gains Tax Exemption for Over 65s

• Homeowners over 65 selling their primary residence can qualify for a full exemption from capital gains tax.
• Condition: Must have lived in and owned the property for at least three years prior to the sale.

✔️ Reinvestment of Sale Proceeds in Primary Residence

• Spanish tax residents can defer or eliminate capital gains tax by reinvesting the entire sale proceeds from their main home into another primary residence within two years.
• Reinvestment must be complete and within the EU/EEA region.

✔️ Deducting Allowable Expenses

• The taxable capital gain can be lowered by deducting qualified expenses such as:
• Purchase costs (notary fees, property transfer tax, registration)
• Selling costs (real estate agent commissions, legal fees)
• Capital improvements (major renovations increasing property value; routine maintenance does not qualify)

✔️ Using International Double Taxation Treaties

• Spain has agreements with over 90 countries, including the UK, allowing non-residents to claim tax credits for taxes paid abroad.
• This helps avoid being taxed twice on the same capital gain.
• Proper forms and compliance with reporting requirements in both countries are necessary.

✔️ Strategic Ownership Structures

• Holding property through corporate entities or investment vehicles may offer capital gains tax advantages, especially for high-value assets.
• Requires expert international tax planning and local legal advice.

These methods are fully legal and compliant with Spanish tax law, helping property owners and investors reduce or avoid capital gains tax liabilities.

Residents in Spain who are over 65 years old can be fully exempt from capital gains tax when selling their main home, provided they have owned and lived in the property for at least three years.

This exemption applies even if they do not reinvest the proceeds into another property. There is also a life annuity exemption allowing older residents to invest gains into qualifying annuities to reduce or avoid tax. Non-residents do not qualify for this age-related exemption. This tax relief makes it advantageous for seniors to plan property sales carefully in Spain.

In 2025, Spain’s capital gains tax system continues to apply progressive rates for residents, but there have been important changes affecting how gains are calculated. Notably, Spain has eliminated the “inflation relief” adjustment (coeficientes de abatimiento) that previously reduced taxable gains for properties bought during high inflation periods, such as the real estate boom of the early 2000s. This means sellers of older properties may face significantly higher capital gains tax bills.

The current tax rates for residents are progressive:
💶 19% on gains up to €6,000,
💶 21% up to €50,000,
💶 23% up to €200,000,
💶 27% up to €300,000,
💶 30% above €300,000.

Non-residents pay flat rates (19% for EU/EEA, 24% for others).

These changes emphasize the importance of careful tax planning when selling assets in Spain.

Capital gains tax in Spain does not automatically disappear simply by holding a property for a certain length of time. Unlike some countries, Spain does not generally exempt gains from taxation based solely on holding periods. However, there are a few key considerations related to time:

• If you are over 65 and selling your primary residence, you must have lived in and owned it for at least three years to qualify for full CGT exemption.
• For properties bought during specific periods (e.g., between 2012), some partial exemptions or reductions might apply.
• Reinvestment of the proceeds from the sale of a main home within two years can defer or eliminate capital gains tax liabilities.

There is no general rule that simply waiting longer than a certain number of years eliminates capital gains tax.

There are several important exemptions and deductions that can significantly reduce capital gains tax liability in Spain:

• Exemption for Residents Over 65: Residents over 65 selling their primary residence are fully exempt from capital gains tax if they have lived in the property for at least three years.
• Primary Residence Reinvestment: Residents of any age can defer or eliminate capital gains tax if they reinvest the entire sale proceeds from the sale of their main home into another primary residence in the EU/EEA within two years.
• Deductible Costs: Expenses related to purchasing and selling the property, including notary, legal fees, real estate agent commissions, and any capital improvements, can be deducted from the capital gain to lower taxable amounts.
• Special Reductions: For properties purchased between May 12 and December 31, 2012, both residents and non-residents may benefit from a 50% reduction in taxable capital gains.
• No Deduction for Furniture Fees: Costs associated with furniture or movable goods are generally not deductible unless properly invoiced.

Capital gains tax in Spain presents several complexities, with progressive rates for residents, flat rates for non-residents, and important exemptions, especially for those over 65 and for reinvesting in a primary residence. Understanding how much is capital gains tax in Spain, how to avoid or minimize it legally, and being aware of recent changes like the removal of inflation relief are key to effective tax planning. Proper documentation and professional advice can make a significant difference in avoiding costly mistakes when selling property or other assets in Spain.