Property Taxes Marbella.

What do you have to pay when selling real estate in Marbella?

1) Plusvalia: based on the increase in value of the land the property occupies throughout the number of years you have been the owner, sellers are required to pay a tax.

2) Community Fees: Verify that your fees are current. To establish this, you will typically need to sign the Title Deed with the buyer in front of a Community Certificate.

3) IBI and Utilities: Verify that all of your utility bills are paid in full as they must be settled by the sale date. When signing, you must present the original proof of payment. For the entire year that they are selling, sellers are required to pay the council tax or IBI.

4) Mortgage Cancellation Fees: Depending on the amount of your existing mortgage, your bank will likely charge you between 0.5% and 1% in cancellation fees.

5) Notary Fees for Mortgage Cancellation and Registration – In addition to point 4 above, it is your responsibility as the seller to ensure that your mortgage is canceled at the Notary and Registry. This could cost between €600 and €1000, and the solicitor will most likely retain this sum to ensure that it is completed.

6) Non-Resident Retention: 3% of the sales price mentioned in the “Escritura” (Title Deed) must also be retained by the buyer of your property if you do not reside in Spain. This money must be paid to the Spanish taxman (Hacienda) on your behalf in order to cover your Capital Gains Tax. Fiscal residents are not subject to retention; but, upon filing their taxes the following year, they can be required to pay taxes on the sale.

7) Legal fees – A good legal office will draft community charges, utility contracts, and “Suma” invoices; they will also schedule an appointment with the notary and handle all related paperwork; they will accompany the seller to the notary and provide translation; they will calculate the 3% retention; they will calculate and advise on Capital Gains Tax; and they will provide fiscal representation throughout the selling process.

Taxes associated with real estate sales

At the time of sale, an owner is responsible for the following costs:

Fees for an estate agent:

Agents Commission: In addition, you will be required to pay the agent’s fees if you sold your property through the services of an agent.

Agency fees can vary depending on the agency and the property’s price; often, they are expressed as a percentage of the sale price. This often amounts to 5% of the sale price + VAT on the Costa del Sol. The owner often pays the commission, however it does occasionally happen that a buyer uses an estate agent’s services to find a property and handle the purchase negotiations. This is an uncommon instance where the buyer will cover the commission.

Property expenses: Until the public deed of sale is signed in the new owner’s favor, the property expenses consist of I.B.I. (municipal tax), trash, community expenses, energy, water, telephone, etc. The buyer or his legal representative may deduct an amount from the final payment to cover these costs if they cannot be precisely determined on that date.

Taxes due when a property is sold:

Municipal Plusvalía:

A tax on the rise in land value since the last transfer is known as the plusvalía municipal. Since January 1, 2013, registering a sale and transferring ownership in the Land Registry requires presenting proof of plusvalía payment. Similar to that, it has been updated in accordance with Royal Decree-Law 26/2021 of November 8, and while its non-obligation to present in the event of a sale at a loss is still in place, there are two significant additional features:

1. All sales within the first year of the property’s ownership are now taxable.
2. The taxpayer will select the more practical of the two calculating algorithms that have been established:

• a. The objective system (just like the previous one). The years of ownership and the land’s cadastral valuation will establish the taxable basis.
• b. Accurate approximation. Here, the years of ownership, the purchase and sale prices, and a reduction coefficient—which each Town Hall may apply up to a maximum of 15%—are used to estimate the taxable base.

It should be emphasized that local councils have regulatory freedom in terms of the tax rate to be imposed (maximum 30%) and the allowances (maximum 95% of the tax liability), even though the taxpayer can select the option that best suits their needs.

Income Tax

Non-residents: Non-residents who sell real estate in Spain are required to pay a tax on the profit (which is calculated as the difference between the purchase and sale prices plus all costs incurred, such as property renovations). This is the Non-Resident Income Tax (IRNR), which is due at a fixed rate of 24% in all other circumstances and 19% of the tax base if the taxpayer is a resident of the EU. In order to guarantee that the tax is collected, the buyer is required by law to deduct 3% from the sale price of the property and deposit the appropriate amount with the State Tax Administration Agency. In the event that the tax payable is less than the 3% withholding, the seller is entitled to Request the over payment to be refunded. In contrast, any withholding that falls short of the entire amount owed must be remitted to the tax authorities within 4 months of the sale date.

Locals: The 3% withholding tax will not be applied if the seller is a Spanish tax resident or a business that files its taxes there.

Natural person, tax resident: in this scenario, you will pay a percentage based on your profit (from 2021, there is a special rate of 26% for profit exceeding 300,000 euros) at the time of filing your tax return. The percentage will be between 19% and 26%.

Exemptions/Payment deferral:

People over 65 are not required to pay personal income tax when they sell their primary house. It must be the owner’s primary house and have been owned for at least three years before being sold in order to qualify as a “permanent residence.”

Reinvestment in property within a maximum of 24 months: If the gain from the sale of the permanent residence is used to purchase new real estate within the two years leading up to and/or following the sale date (counted from that date forward), it will not be subject to taxes.

Once you have found the property of your dreams, please do not hesitate to contact us for more information. We always advise you to speak with a qualified professional to plan your investment from a legal and tax point of view according to your unique circumstances, and before completing the transaction.

The material contained in this guide is intended solely for informational purposes; it is not intended to replace the counsel of a legal or tax professional and is subject to mistakes, omissions, or modifications. There’s no assurance of accuracy.