What taxes do I have to pay when I sell my property?

Learn how to pay municipal capital gains tax, personal income tax, annual tax when selling property in Spain
After the pandemic, many people have decided to move house or even move to another city. Deciding on selling your home is the first step towards a major change in life, but in many cases you do not take into account the taxes that you have to pay when selling the property.

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However, you need to be aware about the taxes that must be paid and declared to the tax authorities when selling a house. Some must be paid when the property is sold and others must be settled or shared with the buyer at the time of signing the deal.

The main taxes are the municipal capital gains tax and personal income tax, although there are other expenses such as IBI, community fees and the rubbish tax.

3 taxes to be paid when selling a flat

  • Personal Income Tax on the sale of a home
Personal Income Tax, commonly known as IRPF, is another tax that must be taken into account when selling a property.

Unlike the municipal capital gains tax, the IRPF must always be included in the income tax return for the year following the sale. In the tax return you must include the capital gain from the sale of the property. This is calculated by finding the difference between the price at which the property was bought and the price at which it is currently being sold.

If you have not made a gain on the sale, it is considered a capital loss, and you must also include it in your tax return. However, as a general rule, you will be able to deduct it.

There are some exemptions where you can save income tax, such as if the owner is over 65 or a dependent. Also if you are going to reinvest the profits in the purchase of a new primary residence.

  • Annual IBI
Property tax is paid annually on any type of property by the owner of the property on 1 January. In many cases an agreement is reached with the buyer of the property or it is included in the sale price.

This tax is also of a municipal nature, so it is governed by what is agreed in the Town Hall where the property is located.

Other expenses when selling the property
When a property is sold, other expenses besides taxes also come into play. For example, those related to the notary, the registry, the expenses for the cancellation of the mortgage or those that you will have to pay in order to have a property free of charges (rubbish tax, energy efficiency certification, etc.).

Read more related articles

How does inheritance law work in Spain? What property can be inherited. Do you need a will if you own a property in Spain. Calculating inheritance tax: residence and non-residence tax rates with examples.

How to sell property in Spain? Details you need to know before selling you property.

Purchase taxes and costs, land tax, registration fee, notary, banking fees and others, final calculations.

How much will it cost you to own real estate in Spain?Bills, taxes, mortgage fees and costs, unplanned expenses.

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