Overview:
In Spain , vendors must bear the following costs when selling property:

• Taxes
• Capital gains tax
• Legal fees
• Notary fees (normally paid for in full by the buyer but the vendor will pay in some exceptional situations)
• Other costs
• Estate agency fees
• All costs in connection with the property up to the completion date (e.g. utility costs)

Capital gains

When real estate is sold in Spain, vendors must pay tax on the capital gains they have made based on the property's increase in value over the course of their ownership. This applies to residents and non-residents alike in accordance with both Spanish legislation and the provisions of the double taxation treaty between Spain and the UK.

When selling real estate in Spain, vendors are taxed twice on the appreciation in capital value of their property:

• Firstly, the capital gains is taxed as income taxation
• Secondly, the capital gains has to pay “plusvalia” to the municipal authorities

For the purposes of income taxation paid to the national tax authorities, capital gains on the property is calculated as the difference between the price the owner originally paid for the property and the price they are now selling it for (with a few adjustments to factor in selling costs). Residents are then taxed at a flat rate of 15% while non-residents are taxed at a flat rate of 35%. If the property was one of the vendor's main residences and the money is to be reinvested in a new Spanish dwelling that falls within certain criteria, sellers will be exempt from this tax. A withholding tax of 5% is charged to purchasers when buying from non-residents which non-resident vendors can then reclaim once they have submitted their tax return on the property (see "Property Purchase Costs" section above for details).

In addition, the municipal authorities also levy a communal tax on the appreciation in value of the land (without buildings) during the seller's period of ownership. This tax carries the snappy title of Impesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (or IIVT for short...) This tax replaces the old “plusvalia” tax but in general Spanish usage, many still refer to IIVT as plusvalia. IIVT is fixed by local authorities and varies by area and the level of profit. Only urban land is liable for IIVT.

Estate agent's fees

The usual way to sell property in Spain is by engaging the services of a real estate agent. The estate agent's commission is nearly always paid for by the vendor in Spain. The vendor will agree the level and due date of the commission to be payable to an estate agent on successful completion of a sale when they engage the estate agent's professional services. Agents' fees can vary anywhere between 2% and 15% of the purchase price.

Special situations and exceptions

Normally, IIVT is paid by the vendor but it is an accepted practice for the purchaser to pay if this has been agreed and included in the contract in advance.

In some exceptional circumstances buyers will pay the estate agency fees. This will have to be agreed in advance by both parties prior to the sale.

Sources & Resources:

• Del Canto, L. F. & Elattar, C. (eds.) (ICEX, International Abogados) – How to buy your home in Spain
• www.deloitte.com
• Foster, A. I. – The Complete Guide to Buying a Property in Spain (8 th Edition)
• www.idealspain.com
• Kalin, Christian H. – International Real Estate Handbook
• Merricks Media Ltd - Red Guides: Buying a Property in Spain
• www.real-estate-european-union.com
• Rider, N, Holtom, H & Howell, J (The Sunday Times) – Buying a property SPAIN