‘Municipal Capital Gains Tax’ must be paid to the municipality where the urban land of the dwelling is located every time an urban property is conveyed (whether it be a house, garage, business premise or storage facility, etc.).
It is levied on the increase in the value of the urban land in which the property resides, and is calculated over the period in which the seller has owned the house or urban property for up to a maximum of twenty years, after which the tax is no longer applicable.
The tax is calculated based on the increased value of the land on which the property is built according to the Land Registry. The amount of tax due will depend on how long the seller has owned the property since the last change of hands. The percentage and amount to be paid will be higher the longer the seller has owned the property (up to the twenty-year threshold, as mentioned above).
The rate is calculated based on the “catastral value” of the land indicated in the last receipt, and is set differently by each municipality town hall, ranging from a minimum of 5% to a maximum of 30% on the gain in catastral value from the original purchase date to the selling date.
The law states that it is the seller who must pay this tax in the case of the sale of a dwelling.
With the sale of a property, the seller must pay personal income tax in respect of the capital gains made by the sale within 4 months after signing the public sales-purchase deed, before the notary by means of the pertinent tax return. The gain or loss is calculated as the difference between the acquisition value and the current conveyance value, minus corresponding purchase and maintenance costs.
Tax Rates for Fiscal Residents:
If the seller is non-resident, the tax is a flat rate of 19% on the capital gain from the sale of the property. Additionally, the purchaser (whether resident or not) is obliged to withhold 3% of the agreed consideration which is to be paid to the Tax Agency within one month of the purchase date.
Non-Resident sellers need to be aware of the international double taxation agreement which exists between Spain and other EU countries. Any income tax on the gains of the sale of a property already paid in Spain can be deducted from tax due in the seller’s country of residence.
Attorney Fees. Approximately 1% of the sales price, to be paid by whoever solicits the legal advice.
Agency Fees. Paid by the seller unless otherwise agreed. The agent’s commission varies between 4% and 6% of the final sales price (excluding VAT), although the standard in Ibiza is 5%.
The following is a summary of the information required from the seller in preparation of the signature of the title deed (and ideally already in preparation for placing the property for sale, so that potential buyers can have quick answers to questions related to the property’s documentation).
Documents required for signing before the notary:
