Costa del Sol Property Blog

In order to encourage real estate property investments, the Spanish Government recently approved a Royal Decree on 11/05/12

The main measure is a reduction of 50% in the Capital Gains Tax on sale proceeds for Spanish properties bought between 12th May and 31st December 2012. Regardless of when you sell the property!

The tax reduction benefits both residents and non-residents and legal entities, under the following conditions:

• The property must have been purchased between 12th May and 31st December 2012
• It must be an urban property (residential or commercial)
• The buyer and seller should not have any connection (business or family)
• The property should not be considered a commercial development or venture.

The tax reduction will be applied in the annual Income Tax declaration or in the company tax of the fiscal year in which the capital gain was generated.

Provided that the applicant meets all necessary requirements, the capital tax  gain on a Spanish property as follows:

The tax on capital gain to a non-resident is as follows: 

Sale in 2012-2013 :

Before 21 %
Now 10.5%

Sale in 2014 or after:

Before 19%
Now 9.5%

The tax on capital gain to a Spanish tax resident is as follows:

Sale in 2012-2013 :
Before, up to 27%, depending on tax bracket
Now, up to 13.5%, depending on tax bracket

Sale from 2014 :
Before  up to 21%, depending on tax bracket
Now up to 10.5%, depending on tax bracket

In the case of companies, the Capital Gain is taxed at approximately 15%.
It is also worth pointing out that should you be buying a newly built property, the IVA (VAT) still stands at 4% and these properties can also benefit from the Capital gains tax reduction should they be bought during the period mentioned above.

This welcome stimulus should benefit all buyers who have been thinking of buying in the near future.

Regards
Andrew Belles