Selling Property in Spain? Save Big Money on Taxes Following This Advice

Springtime is the moment to blossom, to grow wings, and to fall in love again. Are you feeling this ethereal push forward and would you like to make your money move? Well, spring is the moment of the year to make the boldest moves. Just look around. The entire world is leaving the past behind and dressing up in bright colours for new life. Sell your property reducing taxes and enjoy the extra cash in your pocket during the best season of the year.

Being orderly is more profitable than you thought

When buying property in Spain, you are paying several invoices (including VAT) and a transfer tax. That is pretty much common to any other country in the world, but did you know that those could be deducted when selling?

Well, in case you didn´t, this is a positive news flash. Moreover, this move will allow you to save big money (AKA thousands of Euros) when selling the property. The only requirement you need to abide by is making sure to save every receipt from the moment you purchased the property.

Thus, the lesson is, being orderly with your papers, means a lot of money in the long run.

What expenses and taxes can be deducted?

Let´s release the scoop right away and help your anxiety. As a non-resident seller, you are entitled to a staggering 3% CGT tax rebate. Furthermore, you can add some legal interests to that number.

To make things even more clear, your legal help can deduct several acquisition and sales-related expenses. This, in turn, will drastically reduce the value of the property (for tax purposes only). Hence, since you´re making less money on paper, you are also paying significantly less taxes upon concreting your sale.

What is CGT?

We spoke about a reduction in CGT, but what exactly is CGT? Well, in case you´re not familiar with it, the acronym stands for Spanish Capital Gain Tax. This is a tax that non-resident sellers pay over the profit emerging from the sale itself.

How does the Spanish government calculate the profit? Well, they make the difference in purchase prices on the title deeds. 

Subsequently, the CGT is calculated over the net gain, not the price of the property. Thus, if your new deed has a reduced value when comparing it to the first one, your net gain will be lower. As a result, you’ll end up paying a reduced amount.

VAT invoices reduction on buying and selling

Saving on CGT is not the only way of saving. Let´s take a look at some of the VAT invoices and taxes that can be cut from your CGT bill. As mentioned above, this will drastically change the sales tax you pay for selling your Spanish property.

When buying

Keeping all the original receipts will help you calculate these numbers more easily:

•      Notary fees

•      Taxes

•      Land Registry fees

•      Lawyer’s fees

When selling

Again, to prove this at the time of selling, you need to have all the original paperwork.

•      Any and all improvements made to the property while you were the owner. These should be modifications done to the property that have nothing to do with maintenance. For example, fitting a new alarm, A/C installation, re-tiling the roof, or installing a new wooden floor could be some examples. On the other hand, gardening could be an example of maintenance.

•      Lawyer’s fees

•      Estate agent’s commission

Conclusion

When buying and selling property, being orderly can pay off in the long run. Follow our advice and make the most out of your investment. Furthermore, capitalize the improvements made to the house and reduce the numbers in your taxes.

Be wise, invest well, and live the life you´ve always dreamt of.