Whether you have purchased a property in Spain as an investment, or you have identified a profitable selling opportunity in the market, there are several elements to consider prior to selling property in Spain as a non-resident.
We have put together the below guide to give you access to all the information you’ll need to make the right choices when selling your home in Spain, helping you save costs and minimise risks.
The first steps
While there are a number of elements for non-residents to consider when selling a property in Spain, there are ways to ensure you are fully aware of the requirements, and acquiring as much knowledge as possible regarding local laws and regulations will benefit you throughout the entire process, helping you plan ahead and avoid mistakes.
If you are considering selling a property in Spain, you may already be aware of the tax implications of owning a home as a non-resident, yet there are other factors that come into play when you decide to sell said property, including getting to grips with additional taxes and evaluating the state of the market, amongst many others.
For instance, you may be wondering whether now is the right time to sell. The Spanish property market has always been popular with UK and other foreign buyers, and the current property boom means there is more demand than ever, with sales having gone up by 22% compared to the previous year thanks to the interest of foreign buyers.
So, if you have already made the most of your Spanish home and are ready to move on to new and exciting investments within the property market, it may just be the perfect time to explore your options.
Selling property in Spain as a non-resident
The process of selling property in Spain as a non-resident is not entirely dissimilar to that of selling a home in the UK.
First and foremost, you’ll need to prepare the necessary documents. These include the title deeds to the property, utility bills, receipts for the local municipal property tax, and a list of any furniture or other items that you’d like to include in the sale.
You should also make sure you purchase an Energy Performance Certificate – whose cost will depend on the size of your property – which can be issued by an architect or house engineer.
The buyer is required to pay 10% of the sale price as a deposit, which they will lose should they decide they no longer want to go ahead with their purchase. However, if you – the seller – change your mind, you may have to pay double the value of the deposit.
It is also important to remember that Spanish law requires you to have a notary before completing the transaction. This neutral third party will ensure all documents are in order, ensure taxes have been paid and notify the Spanish Land Registry of the change in ownership of the property.
As you will receive euros in exchange for your property, you should seek to transfer this payment with a convenient rate of conversion, to ensure you don’t unnecessarily lose any of the money you have acquired.
The cost of selling property in Spain
The cost of selling property in Spain will largely depend on the amount of tax you’ll need to pay, which in turn is based on a variety of factors.
The taxes you’ll need to take note of are the capital gains tax, the Plusvalía tax and income tax provision.
Selling property in Spain UK tax implications
As a non-resident and a UK citizen, any capital gains you obtain from the sale of assets in Spain will now have a fixed-rate tax of 24%, compared to 19% prior to the EU exit.
The Plusvalía tax, on the other hand, is not a fixed-price fee, as it taxes an increase in value of land over the ownership period, and it is calculated based on the market value of a property.
Its cost may vary depending on how many years have passed since you bought the property from the previous owner, its size, and whether there have been any improvements or changes to the area to justify an increase in value.
Additionally, income tax provision will also cause non-residents to face a 3% retention of the selling price, to be paid to the Spanish Tax Office.
While these taxes are payable in Spain, you may also be taxed by the UK – the country where you made the gain. However, due to the double taxation convention agreement between the two countries, you may be able to claim tax relief in the UK.
Selling property in Spain after Brexit
While your rights as a UK citizen owning property in Spain have so far largely remained unchanged, the main repercussion for property sellers is the increase from 19% to 24% as a result of the capital gains tax.
And though property experts had predicted an increase in UK expats selling their Spanish properties – which has proved to be true – many other non-EU expats are also buying, making selling a house in Spain after Brexit a profitable investment that’s likely to pay substantial dividends.
Estate agents selling property in Spain
Even in the best of circumstances, selling a home may be a stressful process, and although you may feel like you have all the information you need, enlisting the help of professionals can make all the difference.
Having an English-speaking agent with a wealth of experience operating in the Spanish market can make the selling process a lot easier, confidently advising you on the best course of action and guiding you every step of the way.
The Andrew Brown team have worked with a number of UK clients to help them sell their home in just five simple steps. To learn more, please get in touch with the team.
