Capital Gain Tax
In the case that you sell a Spanish property more than one year after purchasing it, then you are liable to pay Spanish capital gains tax (GGT) on the difference between the amount that you sell the property for and the amount that you declared having purchased it for previously, minus any inflationary gain. A non-resident will pay Spanish CGT tax at 35% and residents will pay at a rate of 15%. A resident may have the option to ''roll'' the tax into another property provided that it is a single main residence.
Although the figure of 35% for non-residents sounds high, CGT is subject to an annual "indexing" ("inflationary") tax relief, which means that an inflationary "index" allowance is subtracted from the profit before the CGT rate is applied. A Non-resident who purchased their property before 1986 actually has no CGT tax to pay on sale.
Whereas non-residents who purchased their properties between 1986 and 1998 have a complicated tax position as both the old formula (an indexing allowance of about 11 % per annum) and the new formula (an indexing similar to the rate of inflation, recently about 1 %) need to be considered.
Non-Residents are liable for a "cautionary" retention tax of 3% when they come to sell their Spanish property. For example, when a non-resident sells their Spanish property their buyers pay 3% of the sales price (retention tax) directly to the Spanish tax authorities and will only receive 97% of the sales price. This retention tax is kept "on account" by the Spanish tax authorities until the non-residents capital gains tax is calculated. Once the capital gain is determined (i.e. the profit minus any inflationary considerations for the period that the property was owned) and the appropriate CGT is calculated, the Spanish tax authorities will deduct the retention tax from the CGT that is liable.
If the CGT liable on the sale of the Spanish property is more than the 3% retention tax that is held "on account" then the non-resident has to pay the difference. If, however the CGT liable on the sale of the Spanish property is less than the 3% retention tax that is held "on account" then the non-resident is reimbursed the difference by the Spanish tax authorities.
A Spanish property bought and sold in a quick timescale will gain virtually no capital gains tax relief.
Capital Gains Tax on the sale of properties for non-residents is set at 21% 2014 (in principle, to go back to 19% in 2015) payable on profits earned on the difference of the property value between the year of purchase (purchase price plus costs) and the year of sale (sales price minus costs), based on the approved annual percentage increase on the base value approved by law.
Notwithstanding, for the sale of an individually owned property acquired prior to December 31, 1994, special transitory taxation conditions apply.
Capital Gains Tax for Residents has undergone changes in 2013, and has become stricter. This change entails that if these gains have been generated over a period of up to one year, these will be included in the general tax base, adding them, among others, to employment income (which can be up to 56%). Any profits gained in a period greater than a year will continue to fall in the current rate, i.e., a fixed rate ranging from 21% to 27%. Therefore, the change introduced for 2013 is the removal of the flat taxation rate for income generated from "speculative" activities and its taxation becomes equaled to the rate of employment income.
Taxable base rate on savings - Applicable rate%
Up to 6,000 €: 21%
Between 6,000€ and 24,000€: 25 %
From 24,000€: 27 %