Selling a property in Spain requires careful preparation, knowledge of Spanish regulations and compliance with various tax and administrative obligations. In this article, you will find a step-by-step plan of the sales process, paying particular attention to the legal and tax aspects foreign sellers need to consider.
1. Selling your property in Spain? Start preparing your dossier
Before putting the property on the market, it is advisable that all legal and administrative documents are complete and correct. With a complete file, you will be able to move faster on a sale and reduce the chances of unwanted surprises. The following documents should at least be available for a smooth sale:
- Notarised title deed (Escritura pública de compraventa)
- Your NIE number
- Inventory list with the contents you wish to transfer with it.
- Note simple: an extract from the property register (Registro de la Propiedad), confirming the legal status of the property
- Cadastral map (Descriptiva y Gráfica)
- Assessment notices and proof of payment of property tax (Impuesto sobre Bienes Inmuebles - IBI)
- Energy performance certificate (Certificado de Eficiencia Energética - CEE)
- Certificate of conformity (Licencia de primera o segunda ocupación), confirming that the property meets habitability standards. This document is not compulsory in every region.
- Articles of association and recent minutes of the general meeting of co-owners , if the property is part of a co-ownership
- Your bank details if you have a Spanish mortgage loan current.
It is advisable to verify these documents in order to correct legal irregularities or incompleteness prior to the sale. This will reduce the chances of a prospective buyer withdrawing from the sale afterwards.
2. Sales strategy: via estate agent or private
You have the choice of:
- Engaging a real estate agent: it is responsible for promotion, viewings and negotiations with potential buyers. The usual commission is 3% to 6% of the sale price.
- Organising the sale yourself (from individual to individual): this requires a greater degree of commitment but avoids brokerage fees.
In both cases, it is appropriate to realistically estimate the market value of the property. An appraisal by a recognised expert can help with this. When pricing, take into account capital gains taxes (see below).
3. Purchase agreements
When an interested buyer is found, the reservation contract is usually signed first. This contract is similar to an option. The buyer pays a reservation sum between usually 1,500 euros and 10,000 euros (depending on the purchase price) in exchange for blocking the sale of the property for a certain period of time. A reservation contract thus contains the following elements:
- The agreed sales price
- The date of the notarised transfer
- Payment modalities by the buyer
- The reservation period, usually 2 to 4 weeks
Within that period, the buyer can then make the legal checks and the private sale agreement (Contrato de Arras) will be drawn up. In it, you will find the detailed terms of the transaction. It is common for the buyer to also pay 10 per cent of the purchase price at this time.
This is a binding agreement: if the buyer withdraws without an agreed reason, he loses the deposit. If the seller withdraws, he is obliged to repay double the deposit received.
4. Notarial transfer
The final sale will take place in front of a Spanish notary. During this meeting:
- Will the escritura pública de compraventa signed
- Does payment of the sale price take place (usually by bank cheque or immediate transfer)
- Ownership is officially transferred and the buyer receives the keys
- Hereafter, the deed then entered in the property register in the name of the buyer
The costs of these actions are in principle borne by the buyer, unless otherwise agreed.
5. Tax obligations
a) Municipal capital gains tax (Plusvalía Municipal)
This tax is levied on the increase in value of the land since the previous transfer. It is payable to the municipality where the property is located and is borne by the seller. Find more information on the calculation of the municipal capital gains tax here.
b) National capital gains tax
A non-resident seller is subject to a tax of 19% on capital gains realised. It is possible to deduct expenses. It is important to map out all purchase, improvement and renovation costs and collect invoices in advance.
Certain exemptions and reductions exist for Spanish residents, for example when reinvesting in a main residence within the EU or EEA.
Learn more about Spanish capital gains tax here.
(c) Withholding tax of 3% on the sale price (Retención del 3%)
If you are a non-resident, the buyer is obliged to withhold 3% from the sale price and transfer it directly to the Spanish tax authorities (Agencia Tributaria). This deduction serves as an advance on capital gains tax and can be settled by the seller via the form Modelo 210. Find more information on this withholding tax here.
(d) Notifications
Sellers in Belgium or the Netherlands may have to report the sale in their tax return.
6. Handling after the sale
After the transfer, the seller needs to take some administrative steps:
- The Spanish bank account should only be concluded after all taxes have been paid, if you have a Spanish bank account.
- Contracts with utilities (water, electricity, internet) must be terminated or transferred
- The municipality should be informed about the transfer of ownership
- The co-owners' association should be informed of the transfer of ownership, if applicable.
Conclusion
Selling a property in Spain as a foreign owner requires not only knowledge of Spanish real estate law, but also a thorough tax analysis. After all, a prepared seller experiences a smooth sale and minimises his taxes.
Do you have questions about selling property in Spain? Confianz can assist you with the legal settlement of the sale process. Feel free to take contact on.
