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Buying and Selling

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  • Buying and Selling

    We are about to put our house up for sale.
    We want a small apartment in the same area.
    Does anybody know what fees are involved?We own our house,so no mortgage is involved.
    We were also thinking of putting our apartment in 4 names.Ours and our 2 childrens.This is to prevent inheritance tax when we die.Is this possible?
    Any help would be very much appreciated!Thank you.

  • #2
    This post was a long time ago before we took over, but other people
    may want some information. When selling a Property, there are
    certain financial (tax) obligations which the owner needs to know.

    3% Retention
    When setting the price of the sale, the owner should be aware that
    if they are non resident they will lose 3% of the declared value
    in what is called the Retention. This is a sum which, although it
    is the responsibility of the seller to pay, in order to ensure that
    this takes place, the buyer actually registers the forms with the
    Treasury Department, usually by using a Fiscal Representative.

    The Fiscal Representative of the Buyer will complete a tax form
    detailing who bought the property, and who has sold the property.
    The form is processed by the Treasury Department.

    If the Seller has not paid their annual taxes whilst owning the
    property, the 3% retention will be retained by the Treasury Department.
    However, if the Seller is up to date on all tax payments, there is
    the opportunity to reclaim this amount when filing for Capital Gains
    Return. If the Seller is a Resident and has made full tax returns,
    there may not be the 3% retention if there is a fiscal residency certificate no older than 3 months old.

    Capital Gains Return

    This is a tax calculated on the difference between the purchase
    price of the property originally, and the sale price of the house in
    this transaction. The difference between these two amounts is the profit which has been made.

    Some expenses can be deducted. The amount left after deductions is
    subject to tax when the sellers are Non-Residents of Spain. If the
    Capital Gains amount is more than the 3% Retention, the difference
    requires to be paid. If the Capital Gains is less than the 3%
    Retention, the difference should be returned by the Treasury
    (assuming that all annual tax returns are in order).

    A Fiscal Representative will calculate the paperwork for this and
    it is for the Seller to actively pay the amount.

    In order to make things easier for both buyer and seller, it is
    normal to pass all paperwork to your Fiscal Representative to
    collate and liaise with the Representatives of the Buyers.

    The plusvalía is a local (municipal) tax charged by the town hall
    on properties when they are sold. It is calculated on the rateable
    value of property and the number of years that have passed since the
    property was last changed hands. The objective is to tax the
    increase in the value of the land on which the property stands, some
    of which is due to improvements to the area carried out by the local
    government and the community at large.

    The base for this tax is the valor catastral (an administrative
    value that is usually lower than the market value, sometimes
    considerably so) of the property. The amount due in tax will depend
    on how long the seller has owned the property: the longer the
    period, the higher the amount of tax. The Seller usually pays this.

    Your Fiscal Representative?s office should provide the following services -


    Preparation of Utilities Contracts, Community Charge
    and Suma Invoices to be given to new owner

    Liase with the Purchaser´s Representatives and Notary

    Prepare the Notary Appointment and all related Paperwork

    Accompany you on day of the Sale to the Notary

    Translation at the Notary

    Calculation of the 3% Retention

    Verification from Buyer´s of Payment of 3% Retention

    Calculation and Advice re Capital Gains Tax

    Completion of all Tax Related Paperwork
    Provide Fiscal Representation throughout the Process

    If you would like any further information on how the process works,
    or have any legal, fiscal or general questions you would like
    answered, please email sales@spanishsolutions.net and we will be happy to help.

    You also mentionned the ownership of the property. How the
    inheritance works is if you are non resident and one person dies the
    beneficiary of their Will (Spanish Will is easier) will need to pay
    inheritance tax on their 25% in this case and any other assets in
    Spain in their name. Then the deceased person´s share of the house
    will need to be transferred into the name or names of the
    beneficiary at the Notary. We would be happy to provide more guidance on the situation.

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