How to pay less tax on selling property in Spain

Raymundo Larraín Nesbitt, March, 1. 2021

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By Raymundo Larraín Nesbitt
Lawyer - abogado
1st of March 2021

Springtime fast approaches. It is again that time of the year in which buyers' ‘nest' instincts quick in, driving estate agents into a buying frenzy.

With this in mind, I’m writing a short post as a gentle reminder on how to greatly reduce your tax bill on selling property in Spain.

Whilst understandably most buyers are giddy on buying, and have anything on their minds other than selling, the fact is that if you want to greatly mitigate your tax bill on selling, you should plan ahead. Ironically, the best time to do this is when you buy a property in Spain. Planning ahead is key to pay a low tax bill.

Smart buyers will safely store a series of VAT invoices and taxes on buying to greatly reduce their CGT liability on selling, even years on. We collate below a list of taxes and invoices that may be offset against your CGT, on selling, greatly reducing your tax bill.

List of expenses that can be written off

On selling property in Spain, your lawyer can write off a series of acquisition & sales expenses that greatly reduce your profit, for tax purposes. As you are taxed on the profit you've made, the translation of this is that you pay very low taxes on selling.

In fact, if done right, a non-resident seller is entitled to a 3% CGT tax rebate, plus legal interests. That's a great deal in taxes a company like Larrain Nesbitt Abogados can save you.

1) On buying

• Lawyer’s fees
• Notary fees
• Land Registry fees
• Taxes (yes, taxes on buying can be fully offset)

2) On selling

• Lawyer’s fees
• All property-related improvements (not maintenance costs) i.e. glass curtains, refitted kitchen, roof retiling, wood flooring,A/C installation, house alarm, etc.
• Estate agent's commission

Conclusion

Speaking from experience, I know it’s challenging for most buyers to be thinking of sales taxes on buying. Most people are enthralled by the colour of their new curtains, their fancy walk-in closets, the breath-taking sea or mountain views, the infinity pool, the lush tropical gardens and such trifle details.

However, it is my dull job to throw on a damper on buyer’s warm & fuzzy mood, and gently remind taxpayers that you can save yourself a great deal in taxes on selling (in most cases dozens of thousands of euros) if you follow my above tax advice. You're welcome.

“But one type of book that practically no one likes to read is a book about the law. Books about the law are notorious for being very long, dull, and very difficult to read. This is one reason many lawyers make heaps of money. The money is an incentive – the word “incentive” here means “an offered reward to persuade you to do something you don’t want to do – to read long, dull, and difficult books.” – Lemony Snicket, The Bad Beginning

Daniel Handler (1970). Is an American writer and musician. He is best known for his children's series A Series of Unfortunate Events and All the Wrong Questions, published under the pseudonym Lemony Snicket.

At LNA we can assist you buying, selling or renting out your property in Spain. We have 18 years’ experience in conveyance & tax. We are also specialized in Immigration & Residency permits.

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Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, residency, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

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