what tax do i pay when selling my property?

A start for you...

When a non-resident sells a property one major consideration is the fact that 3% of the purchase price will be retained by the purchaser who is obliged to pay it to the tax office on account of the seller's Capital Gains Tax liability. This is something different from the plus-valía which is also payable by the seller and is based upon the increase of the value of the land over the period of ownership.

These funds are not held by the notary but by the purchaser who must pay the amount withheld to AEAT on form 211 within one month of the date of the transaction although a notary will sometimes take care of this procedure and add it to his bill. The purchaser must give a copy of the form 211, bearing the bank endorsement showing that the payment has been made, to the vendor who then has three months from the date of payment of the retention to AEAT to submit a Capital Gains Tax declaration on form 210. 

Expenses inherent to the original purchase can be added to the purchase price and expenses inherant to the sale can be deducted from the sale price including the agent's fee as long as properly receipted invoices are available. These expenses must be inherent to the purchase and sale respectively and cannot include cost of routine maintenance of the property. Major building works which may have been carried out during the period of ownership and have been made subject of an 'escritura de obra nueva' may also be taken into account and the capital gain calculated separately but on the same form. Capital Gains tax is then payable on the overall profit at 19%. 

If the result is positive the seller must pay the balance due. If it is negative the seller may reclaim the amount overpaid which should be refunded within six months. In this case the Spanish bank account needs to be left open until the refund is made or, alternatively, you may provide details of a foreign bank account into which it can be paid. 

If the period in which the retention is repaid is more than six months from the date of presentation of the CGT declaration interest must be paid but if there is any error on the declaration or past non-resident taxes have not been paid the retention will not be repaid and the clock will not start. In this event it is unlikely that AEAT will make contact the onus being on the claimant to ascertain the status of the declaration.

If a refund is due the form has to be presented at the bank in order that a certificate may be issued to the effect that the account number into which the refund is to be paid is correct. This is a slightly different procedure from previously when all the bank had to do was stamp the form. Depending on the bank, the staff may need a little 'encouragement' to do this. All the documentation then has to be presented at an AEAT office. If extra tax has to be paid this may be done at the bank.

Husband and wife may submit a joint return but unmarried partners and other joint owners must submit separate returns. Claims for refunds will not be entertained if the seller is not up to date with the payment of annual non-resident tax returns. In this event AEAT will not automatically calculate the amount owed and deduct it. The onus is on the seller to prepare tax returns for the years during which it has been unpaid which can either be paid in cash in the normal way or deducted from the amount of the refund. Bear in mind that fines and interest may be applied to the previous years.

If the property is subject of usufruct the holders of the usufruct must also submit a CGT declaration according the the relevant percentages at the begining and end of the usufruct period.

It is increasingly the case that non-resident sellers who fail to make a Capital Gains Tax declaration are subsequently pursued in their country of residence.

Hi PeterC

 may we say a big big thanks to you for your insightful and concise answers to our 

inquiry regarding tax payable as non residents.

We will consider very thoughtfully your advice and highly articulate information.

it is very helpful and allayed our concerns.

very best regards

Ray and J.