Costs and Taxes When Selling Property in Spain

It’s a common perception that buyers take on the majority of costs in a Spanish property transaction. While buyers do pay significant taxes such as ITP or VAT, the reality for sellers is often more complex. Once agency commission, capital gains tax, municipal charges, and mortgage-related costs are included, the seller’s total expenses can be just as high, and sometimes higher, than those of the buyer. Depending on the structure of the sale and the seller’s tax position, costs typically range between 5% and 15% of the final sale price.

Key Taxes Payable by the Seller

Capital Gains Tax (IRPF)
Capital Gains Tax is applied to the profit made from the sale, calculated as the difference between the original purchase price and the final sale price, adjusted for certain allowable costs.

For Spanish tax residents, CGT is charged on a progressive scale:

• 19% on the first €6,000 of gain
• 21% from €6,001 to €50,000
• 23% from €50,001 to €200,000
• 27% from €200,001 to €300,000
• 28% on any gain above €300,000

For non-residents from EU or EEA countries, the rate is a flat 19%. Non-EU residents are taxed at 24%. The tax return must be filed, and payment made, within four months of the sale.

Allowable deductions may include:

• Notary and registry fees paid at the time of purchase
• Lawyer’s fees related to the original purchase
• Selling agent’s commission
• Purchase taxes, such as ITP or VAT and AJD
• Plusvalía Municipal tax paid at sale
• Documented property improvements, if approved and invoiced

Cosmetic updates or undocumented work are generally not deductible.

Exemptions may apply:

• Sellers over 65 selling their primary residence
• Reinvestment of proceeds into a new primary residence
• Dación en pago (handing property to the bank to cancel debt)
• Severe recognised dependency
• 50% exemption if the property was acquired between 12 May and 31 December 2012

Plusvalía Municipal (Local Land Tax)
This tax is based on the increase in the cadastral value of the land during ownership. It is calculated by the local council, using the duration of ownership and a coefficient. Payment is due within 30 days of completing the sale. While usually paid by the seller, the buyer can be held liable if the seller is non-resident and does not settle it.

Non-Resident Withholding (Modelo 211)
If the seller is not a Spanish tax resident, the buyer must withhold 3% of the sale price and pay it to the tax authority. This is credited against any CGT liability. If no capital gain is made, the seller can request a refund.

Common Costs Incurred by Sellers

Estate Agent Commission
In Spain, the seller pays the estate agency fee.
Typical range is 3% to 6% of the final sale price.
Commission is agreed in advance and paid only upon successful completion.

Mortgage Cancellation Costs
If the property has an existing mortgage, the seller must cancel it prior to or during the sale. This includes:

• Bank cancellation fee, often up to 1%
• Notary fee for the cancellation deed, typically €200 to €400
• Land registry fee to remove the mortgage, typically €100 to €300
• Zero debt certificate from the lender, usually €90 to €120

Energy Performance Certificate
Legally required at the time of sale.
Cost typically ranges from €100 to €150, depending on size and location.

Habitability Certificate (if applicable)
In regions such as the Balearic Islands, a Cédula de Habitabilidad is needed before completing the sale.
Valid for 10 years. Cost generally starts from €100.

Legal and Notary Costs
While buyers cover most notary costs, the seller is responsible for mortgage-related notary work and administrative services such as:

• Tax filings
• Certificate handling
• Final document submission through a gestoría

These may add up to €200 to €500, depending on the transaction.

Worked Examples: Selling Property in Mallorca

Below are two examples based on a sale price of €1,500,000.

Example 1: Non-resident seller, resale property (€1,500,000)

• Capital Gains Tax (10% gain = €150,000, taxed at 19%): €33,380
• Plusvalía Municipal (estimate): €6,000
• Non-resident 3% withholding (creditable): €45,000
• Agency commission (5%): €75,000
• Mortgage cancellation and certificates: ~€800
• Energy and habitability certificates: ~€250
• Legal and admin costs: ~€500

Total estimated costs: €160,930 (10.7% of sale price)

Example 2: Resident seller over 65, main residence (€1,500,000)

• Capital Gains Tax: Exempt, based on age and primary residence status
• Plusvalía Municipal: €6,000
• Agency commission (4%): €60,000
• Mortgage cancellation and certificates: ~€800
• Energy and habitability certificates: ~€250
• Legal and admin costs: ~€500

Total estimated costs: €67,550 (4.5% of sale price)

In cases where no capital gain arises, or the seller qualifies for a full CGT exemption, the overall cost of selling is often significantly lower than the cost of buying. This is particularly relevant in regions like the Balearic Islands, where the buyer must pay transfer tax of up to 13 percent.

Note: These examples are illustrative. Individual tax outcomes may vary and professional advice is recommended.