Selling property in Spain, and the money that does not reach you at completion

A seller who is not tax resident in Spain does not receive the full price at completion. The buyer is legally required to withhold three per cent of the agreed price and pay it directly to the Agencia Tributaria as a payment on account of the seller’s tax on the gain, and a municipal tax on the land value falls due shortly afterwards. Neither is optional, and the second one arrives after the money has gone.

This page sets out what selling property in Spain involves anywhere in the country: the retention, capital gains, plusvalía municipal, what the sale costs, and the documents that decide whether it completes on time. The rules that change by region are set out below.

The retention at completion

Where the seller is not tax resident in Spain, the buyer is obliged to withhold three per cent of the purchase price and pay it directly to the Agencia Tributaria on account of the seller’s liability on the gain. It is paid over on form Modelo 211 and functions as a payment on account against the capital gains tax that will be due. It is not negotiable between the parties. The obligation sits on the buyer, who has their own exposure if they fail to discharge it.

Two consequences follow.

Your net proceeds at completion are lower than the price. Budget the sale on ninety-seven per cent. If it is funding a purchase elsewhere with a completion date of its own, that is the number to plan around.

If the retention exceeds what you actually owe, the excess is reclaimed, not refunded automatically. It requires a filing, and the refund takes time. A seller who has made a loss on the property, or a small gain, is typically owed money back and will not receive it unless someone applies for it, and the money sits with the tax authority for months in the meantime.

That rate, the forms and the deadlines are set nationally by the Agencia Tributaria, which publishes the current figures; check them there before you plan around them, because they change without anyone telling the seller.

Capital gains on the sale

The gain is broadly the difference between the acquisition value and the transfer value, each adjusted for allowable costs and taxes. For non-residents it is declared through the non-resident income tax return.

Both sides can be adjusted. On the acquisition side, the purchase price plus the transfer tax, notary, registry and legal fees paid when you bought, which are the same lines set out in the guide to what buying in Spain costs. On the disposal side, the costs of selling. Documented improvement works may be added; routine maintenance may not, and that distinction is one a Spanish tax adviser should draw rather than you.

Which costs are allowable directly reduces the taxable gain, which is the argument for keeping every invoice from the day you buy. A seller who cannot evidence what they paid in costs is taxed as though they paid none.

The reliefs that exist are mostly for residents. Rollover relief where the proceeds are reinvested in a main home, and the exemption available to sellers over sixty-five, are attached to Spanish tax residence and to the property being the main residence. A non-resident selling a holiday home generally has neither available.

Where the property came to you by inheritance, the acquisition value is the one declared for inheritance tax, not what the deceased originally paid.

The rate applied to non-resident capital gains is set nationally and has moved in recent years, and the treatment of specific reliefs varies with the seller’s circumstances and residence. That is a matter for a tax adviser with your figures.

Plusvalía municipal

Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, formally the IIVTNU, in practice plusvalía. It is a municipal tax on the increase in the value of the land over the period of ownership, charged by the town hall, and it normally falls on the seller.

It is a tax on the land, not on the building, and it is separate from the capital gains tax on the transaction. Sellers who have budgeted for one regularly have not budgeted for the other. The town hall calculates it on the cadastral land value and the years held.

Its calculation was reformed after the Spanish courts struck down the previous formula, and the current system offers more than one way of computing the base. Where there has been no real increase in land value, there are circumstances in which no tax is due and grounds on which the charge can be challenged. That has to be established with the town hall rather than assumed, and raised rather than paid by default.

What the sale costs the seller

Agency commission is the largest single cost of a Spanish sale and it is negotiable, quoted as a percentage of the sale price plus VAT. Which party bears it follows local custom and the mandate you sign; the regional section below gives the position on Mallorca.

What falls to the seller in any case: plusvalía, your own legal fees, the energy performance certificate if you do not hold a current one, and the cost of cancelling any mortgage still registered against the property. Notary and registry costs at completion fall mainly to the buyer, though the deed usually apportions a share.

Regional differences

The retention and the capital gains regime are national. What is administered locally depends on where the property sits: the habitability document, the town hall that assesses plusvalía, and the kind of discrepancy a buyer’s lawyer expects to find.

For a Marbella property the Golden Mile, Nueva Andalucía, the old town, San Pedro and the eastern beaches price differently enough that an average across them tells a seller little. On Mallorca the agency commission is customarily borne by the seller; the guide to selling property in Mallorca covers that, the undeclared building work in the table above, and the season the island trades on.

What a buyer’s lawyer will ask for

Most Spanish sales that run late run late for documentary reasons, and almost all of them are foreseeable. Before going to market, have:

• Nota simple — the current Land Registry extract, showing what is registered and what charges sit on the property.
• Title deed — the escritura from your own purchase.
• The habitability document for the region, and the works licence, particularly for a villa or anything that has been altered.
• Energy performance certificate — required in order to market the property, not merely to complete, and one that has expired needs renewing before the listing goes live.
• Certificate of community debt, confirming community fees are paid up to date, if the property is in a community of owners.
• Recent IBI receipts, utility contracts and bills.
• Your NIE, which you will still need even if you have not used it in years.
• Evidence of your non-resident filings, which the buyer’s lawyer may ask for.
• Documentation of improvement works, for the capital gains calculation.

Then, separately from that list: documentation that what stands on the ground matches what is registered. A buyer’s lawyer will find a discrepancy, and it will either reduce your price or end the sale. What such a discrepancy usually consists of differs by region, and the table above gives both. If one exists on your property, deal with it before the property is on the market rather than under a completion date.

The mortgage that was paid off years ago

Repaying a Spanish mortgage does not remove it from the Land Registry. The charge stays registered until it is formally cancelled, which requires a notarial deed and a registry application.

Sellers discover this when the buyer’s lawyer pulls the nota simple and finds a mortgage that was cleared a decade ago. It is fixable, it takes time and money, and doing it before marketing costs far less than doing it against a completion date.

The agency mandate

You will be asked to choose between an exclusive mandate and an open one, and the choice is less obvious than it looks.

An open mandate feels safer: several agents, more exposure. In practice it often produces the opposite. The same property advertised at different prices by different agents tells buyers the price is soft before anyone has viewed it, and no agent holds enough of a stake to present it properly.

An exclusive mandate concentrates responsibility. It is worth giving only against something specific: a marketing commitment, a defined term, and a clear account of where the property will actually be shown. Read what the mandate says about commission if you find a buyer yourself, and about what happens when it expires.

Pricing from what was paid, not from what was asked

Asking prices on portals record what sellers hoped for. Registered sale prices record what buyers paid, and they are a matter of public record through the Land Registry. Build a valuation from recorded transactions in your own municipality.

An overpriced property does not simply sell later. It sells worse. Time on the market is visible, and the eventual buyer negotiates against it.

If the property was inherited

An inherited Spanish property carries its own history into a sale: how it was valued for inheritance tax, whether that tax was settled, and whether the registry entry was ever updated into the heirs’ names. A sale cannot complete cleanly if the registry still shows the deceased. Putting that right can take months, so check it long before a buyer appears.

Selling without travelling to Spain

You do not need to be in the country for completion. A power of attorney granted to your lawyer, signed before a Spanish notary or before a notary at home with an apostille and sworn translation, allows the deed to be signed on your behalf.

Given that the tax filings follow the sale by months, appointing a fiscal representative in Spain at the same time is usually sensible.

After completion

The sale is not finished at the notary. The capital gains return falls due within a defined period after the deed, and any refund of the retention is claimed through it. Plusvalía is filed with the town hall on its own deadline.

Cancel the utility direct debits and the community membership, and tell your insurer. Keep the file: the return may be assessed long after the money has been spent.

Frequently asked questions

What is withheld when a non-resident sells property in Spain?

The buyer must withhold three per cent of the agreed price and pay it to the Agencia Tributaria on form Modelo 211, as an advance against the seller’s tax on the gain. It is a legal obligation on the buyer rather than something the parties agree, so the seller receives ninety-seven per cent at completion.

Can I reclaim the retention if I sold at a loss?

Yes, but it is reclaimed rather than refunded automatically. You file to recover the difference between the retention and the tax actually due, and the refund takes time. Sellers who made a loss or a small gain are frequently owed money and never receive it, because nobody applied for it on their behalf.

Who pays plusvalía municipal, the buyer or the seller?

Normally the seller. It is a municipal tax on the increase in the value of the land over the period of ownership, calculated by the town hall on the cadastral land value and the years held, and separate from capital gains tax. Where there was no real increase in land value, there are grounds to challenge it.

What can I deduct from the gain?

Broadly the acquisition costs you paid when buying (transfer tax, notary, registry and legal fees), the costs of selling, and documented improvement works. Routine maintenance generally does not qualify. Keep the invoices: a seller who cannot evidence costs is taxed as if there were none, on the same sale price.

Do the over-65 and reinvestment exemptions apply to a non-resident?

Generally not, if you are non-resident and the property is a second home. Both reliefs are tied to Spanish tax residence and to the property being your main residence, so a non-resident selling a holiday home usually has neither available. Check the position with a Spanish tax adviser before you market.

Can I sell without travelling to Spain?

Yes, through a power of attorney granted to your lawyer, signed before a Spanish notary or before a notary at home with an apostille and sworn translation. Appoint a fiscal representative at the same time, since the tax filings follow the sale by months and somebody has to deal with them.