Tips and process for selling a property in Spain
- 1 1.- Check the documents and the legalities of the property
- 1.1 1.-Check the description of the property in the title deeds (“Escritura”)
- 1.2 2.- Check how the property is registered at the Catastro office (also known as “SUMA” or “IBI”, or “COUNCIL TAX”)
- 1.3 3.- Check the legal situation of the construction:
- 1.3.1 A) Certificate of habitation or Occupation License is “obligatory” when selling/buying properties in Spain?
- 1.3.2 B) – No Infraction Certificate .- This is called “Certificado de No Infracción Urbanística” (CNUI).
- 18.104.22.168 Why is Non Infraction Certificate necessary to sell a property in Spain?
- 22.214.171.124 How to “Certificado de No Infracción Urbanística” – Non Infraction Certificate in Spain?
- 126.96.36.199 The Certificate of No Infraction shows some penalisations or fines, or even orders of demolitions, can I sell the property in these cases?.
- 2 2.- Check your personal tax situation – Tax planning when selling a house in Spain
- 2.1 a) How calculate Capital Gains on the sale of Spanish property?
- 2.2 b) How to pay Capital Gains on the sale of a Spanish property
- 2.2.1 1.- Calculate Spanish Capital Gains for Spanish Residents
- 2.2.2 2.- Calculate Spanish Capital Gains as Spanish Tax Residents
- 2.2.3 What is the Spanish Tax Certificate, it is the same as the “TIE”?
- 2.3 – CONCLUSIONS
In case you have decided to SELL your property, please pay attention to the following information:
1.- Check the documents and the legalities of the property
1.-Check the description of the property in the title deeds (“Escritura”)
Check de Title deeds : Check in the property deeds that the property appears described correctly. Property deeds must have a perfect description of the constructions existing at the property.
It is quite common that properties which have been owned by different owners for many years, have been modified with extensions (a new room, closing the porch or terrace, etc.), or with new constructions (a garage, a pool, a guest house).
If the real size and constructions do not make coincide with the description in the deeds do not be worry! there are processes that can be done and there are ways to sort it out!. But you must know them in the same moment in which you take the decision to sell, in order to know excatly “what” you have to do and “how much” will be these actions.
For example: You have a 120m2 house with a 50 m2 pool and a garage converted into a guest house. In the deeds the house only appears as 120 m2, but deeds do not mention the pool. And the garage is described in the deeds as a “garage” not a “guest house”.
In this case, your deeds must be updated, and you need to pay for it.
NOTE: We are not talking about the “internal description” of the house, just the perimeter of the property known as “built size” (in Spanish, “superficie construida”).
Deeds not need to show the real description or distribution “inside” the house. If you have modified the interior of the property by changing inside walls, then it will not be necessary to update the deeds. It will be enough then declare the new distribution upon completion to the notary.
For example, deeds show that there are 4 bedrooms and you converted them into 2 when you bought the property. In this case it is not necessary to update the deeds. As the owner, you have the freedom to reform inside the property (always the proper licence is obtained).
2.- Check how the property is registered at the Catastro office (also known as “SUMA” or “IBI”, or “COUNCIL TAX”)
In the same way as in the deeds, the property must be registered in “Catastro” as it is in real. Every year Catastro bills show the actual size of the property. You must check then if the Catastro records show the actual size of the property as it is “in real”, including whatever external modifications or extensions which have been done.
Remember that Catastro office calculates the Council Tax following the size of the property, taking into account all of the construction components like the house, pool, garage, etc. If you have made extensions on the property, and you have not informed Catastro office, the right moment to do it is when you decide to sell.
NOTE: Please, follow this example: When you purchased the property there was a 120m2 house. This is what was also shown in the deeds and in the Catastro bill. For this reason the Catastro bills (IBI) were 300 EUR.
One year after you built a 50 m2 pool and a 40 m2 garage. You did not declare them to Catastro. If you had declared the new pool and the garage to Catastro, bills for Council Tax would have been increased from 300 EUR to 350 EUR (approximately), 50 EUR more due to the new constructions.
Now, if you would decided to sell your property you must update the information registered in the Catastro Office . You can then inform the Catastro Office about the extensions that you have made and then, they can ask you to pay the 50 EUR (aprox) difference for the non-declared extensions up to 4 years back.
QUESTION: I have extended my property during the time in which I have been the owner, or, simply, my deeds and the Catastro Office do not make coincide with the real size of my property. How do I sort it out?
3.- Check the legal situation of the construction:
To sell the property, it is compulsory to get proof of the legality of the property. TWO documents can help you in this way:
- Habitation Certificate (CH)
- No Infraction Certificate (CNUI)
A) Certificate of habitation or Occupation License is “obligatory” when selling/buying properties in Spain?
ANSWER: It depends on the type of the property
In “New” properties, the builder has the obligation to supply this document to the buyer on completion of the selling process.
But, please, note that in “Resales”, there is no law which forces the vendor to supply this document on completion of the sale. Spanish laws say that, it is the “buyer” who must obtain this document on his name after completion, in order to proceed with the changes of the water and electric names.
At this point we have to say that the administration might refuse to give the CH to the buyer after completion in case the property has been suffered unathorized works, etc from the previous owner. So, if the property is not in perfect legal conditions, there could be a risk to not to get the approval of this document after completion. And this could leave the buyer in a very complicated situation, as he could have then problems to get the utility contracts on his name.
A very important point here is that the existence or validity of the CH and the rest of information about the CH it is not shown in the deeds, but at the local Town Hall of the area!.
So, your lawyer must inspect this matter carefully using his expertise, and experience to confirm a so important document as this one.
From as conclusion , this certificate is ESSENTIAL to the sale the property, and its confirmation must be inspected from the very beginning of the purchase/sale process.
We all know that the CH is a document which shows that property has been constructed respecting and fulfilling the Spanish constructions Laws.
This document is also needed to connect water and electric to the property, when you first acquire the property and to guarantee the changes in the contracts and the supply for the second and successive owners.
CH used to be valid for 5-10 years, and must be renewed any time the property is sold or transmitted, showing the names of the current owners.
Click below to know more about the requirement to provide the Certificate of Habitation on resale process:
B) – No Infraction Certificate .- This is called “Certificado de No Infracción Urbanística” (CNUI).
This is a certificate made by the Town Hall, establishing that the property is free (or not), from any fines on the property derived from a construction or act made on the property without the proper persmission.
For example, the construction of the main house, garages, construction extensions, pools, works on land, scape, etc, without the proper permissions or licenses from the Town Hall.
Why is Non Infraction Certificate necessary to sell a property in Spain?
It will help your sale goes smoothly. If you have all of your documents in order such as certificates that show your property is free of any construction fines, then, the process and the sale will be developped in a faster and easier way.
Having all the documents of the property in place, creates confidence in the possible buyer and his own Solicitor.
Please, note that if there is a fine affecting your property for construction, or for any of the extensions, IT WILL NOT BE SHOWN IN THE DEEDS and / or the rest of documents from the property. This information can only be obtained at the local Town Hall of the area.
From now on , this certificate is ESSENTIAL to the sale the property, and must be obtained from the owner before completion.
How to “Certificado de No Infracción Urbanística” – Non Infraction Certificate in Spain?
The best way to obtain it is from you to apply for it at the Town Hall. You may ask your lawyer to do it.
The Certificate of No Infraction shows some penalisations or fines, or even orders of demolitions, can I sell the property in these cases?.
In case the result of the Certificate of No Infraction shows any type of information about eventual fines, penalisations, or others, you should show to a construction lawyer specialist to indicate how to proceed. Sometimes, the information from this certificate contains hystoric fines whcih are already paid or are now expired, and in other occassions there are grave problems which could affect the sale process.
Being said that, the property can be sold, because the Spanish system allows buyers to buy properties with construction fines, but, buyers must be perfectly informed about the details of those fines, and the consequences that they may have as new owners. In case buyers are duly informed, and they expressly accept to buy the property with those fines, then, the sale can go through.
2.- Check your personal tax situation – Tax planning when selling a house in Spain
a) How calculate Capital Gains on the sale of Spanish property?
Sales of Spanish properties derive Capital Gains liability to vendors.
Caiptal Gains Tax to pay is the 19 % of the “Net profit” of the sale.
To obtaining what is the “Net profit” of the sale you need to follow up this formula:
Price of the sale – Price of acquisition – Expenses and Taxes on acquisition – Cost of “structural reforms” made on the property
Example of Capital Gains calculation:
- You bought a resale property in 2015 for a price of 200.000 EUR.
- On that moment, you paid 24.000 EUR, which is the 12 % of expenses: 10 % Transfer tax + 2 % notary, land registry, solicitor fees, etc.
- Then, you made internal reforms for 17.000 EUR (change of tilling of the floor, repairing the pool, and new windows).
- Some years later you built a garage for a value of 20.000 EUR
Then, you decided to sale now for a price of 260.000 EUR.
What is the Capital Gains derived from this sale?
NOTE: Before we make the calculation, we need to inform that the Spanish administration will consider all the above concepts to reduce the tax, except the one for “internal reforms” for 17.000 EUR value. The reason of this is because “internal” reforms which are not “structural” reforms are not considered for tax benefits.
We use the formula:
260.000 (Price of the sale) – 200.000 (Price of acquisition) – 24.000 (Expenses and taxes on acquisition) – 20.000 (New Garage) =
This is the “Net profit” to be obtained with the sale
As the rate for Capital Gains is 19%, then, the amount of the tax for Capital Gains will be:
16.000 * 19 % = 3.040 EUR
b) How to pay Capital Gains on the sale of a Spanish property
1.- Calculate Spanish Capital Gains for Spanish Residents
Being you NON tax resident in spain, the way in which you pay Capital Gains is the following:
– ON COMPLETION OF THE SALE: 3 % RETENTION
: On completion of the sale, the Spanish administration forces the buyer to make a RETENTION of the 3 % from the value of the Price of the sale. So, you do not receive the full agreed price. The buyer keeps the 3 % of the total price and he has the obligation to deposit it at the Tax office. This is done “the same day of completion of the sale”.
NOTE: Following the above example, in case the price of the sale was 260.000 EUR, the retention tlo be made by the buyer would be 260.000 * 3 % = 7.800 EUR.
– BEFORE 6 MONTHS AFTER COMPLETION OF THE SALE: DECLARATION OF CAPITAL GAINS (19%):
After completion of the sale, you have 6 months to present the “Capital Gains Declaration” to the Spanish tax office. In this declaration, you (or your lawyer), must calculate the tax following the above example. In this case, the amount that you have to pay is of 3.040 EUR.
NOTE: As explained here, the CG derived from this transaction is of 3.040 EUR. As you were retained with a higher amount (7.800 EUR), then, you have a “credit” with the Spanish administration for the difference.
So, if the Spanish administration holds from you 7.800 EUR for CG Tax, as the final result of the tax is only 3.040 EUR, then, the Spanish administration must “refund” you the difference: 7.800-3.040 = 4.760 EUR.
How to claim for this refund? Your lawyer has to include this fact on the same Capital Gains Declaration, to present to the Tax office.
2.- Calculate Spanish Capital Gains as Spanish Tax Residents
In case that you are considered as “Spanish Tax Resident” (which means that you are paying your income tax in Spain as a Spanish resident), then, once calculated the Capital Gains, you will have the following benefits on the tax:
- NO CAPITAL GAINS FOR PERMANENT RESIDENCE: In case the property you are selling is your permanence residence (you have bee using it for more than 3 years as your “permanent home”), then you will have the following benefits:
- If you are younger than 65 years old: You do not pay CG for the amounts of the sale obtained “reinvested” in the acquisition of a new property to be used as your permanent residence. You have 2 years to practice this “reinvestment” (passed 2 years without invest those amounts, you will be taxed in full).
- If you are older than 65 years old: You do not pay CG for the amounts obtained on the sale. And this even if you do not “reinvest” in a new property.
- NO 3 % RETENTION: On completion of the sale, you receive the full amount of the price from the buyer with no retention applicable.
Usually owners confuse the “Spanish Tax Residence”, with the “Spanish Residence”.
In other words, people think that the “Spanish Residence Card, or “Residence Certificate” obtained in the Spanish National Police, is enough to demonstrate that they are “Spanish Residents for Taxes”, and, unfortunately, this is not the case.
The “Spanish Residence Card” (or “Spanish Residence Certification“), is not the valid document to change your Tax consideration as “Tax Resident”.
The Spanish Residence Card (or Certificate) only serves to declare that you are “living” in Spain, in order to facilitate the Police to have a better control over the residents in a determinate area.
What is the Spanish Tax Certificate, it is the same as the “TIE”?
In order to become Spanish resident for taxes, and then start to pay your Taxes in Spain as a normal Spanish citizen, you must obtain the SPANISH RESIDENT TAX CERTIFICATION issued by the Spanish Tax Office or Spanish Customs, and then you will start to pay your taxes in Spain, and not in your country of origin.
And, also, once you need to declare to the Tax of office from your country that you are Spanish Tax Resident, and that you do not wish to continue as Tax Residence on your country-
So, please, check with your tax adviser the taxes that you are currently paying because, even if you are not Spanish Resident, you should be declaring and paying the INCOME TAX NON RESIDENTS.
So, once explained all the above, when you have decided to SALE your Spanish property, please, take this into account that you need to obtain/present the following documents before selling:
- Title deeds of the property (Escritura): If possible, the ORIGINAL ones. With the correct and updated description of the constructions.
- Council Tax Bill (IBI – SUMA) .- With the correct description of the constructions.
- Water and electric bills.- the most recent ones.
- Habitation Certificate also called “LICENCIA DE PRIMERA O SEGUNDA OCUPACIÓN”.
- No Infraction Certificate .- This is called “Certificado de No Infracción Urbanística”.
- Community of Owners Certificate (if the case) showing you are up to date on Community Charges.
- Original NIE & Original Passports
- Energy Performance Certificate
TAXES : You have to present the following tax documents:
Models 210 or 214 from the previous 3 years. If non Spanish Tax resident
Model 100 from the 3 previous years. If Spanish Tax Resident