Selling Your Property in Spain: Legal Steps and Tax Implications (By our Property Lawyer)
Whether you’re moving back home or cashing in on an investment, selling a property in Spain as an expat involves several legal steps and expenses that sellers should be prepared for. From finding a buyer to signing before the notary, and handling taxes on your sale, this guide provides an overview of the process. Our experienced property lawyer in Valencia shares key considerations to ensure your sale goes smoothly and you keep things compliant with Spanish law.
Preparing to Sell: Documents and Due Diligence
Before listing your property:
- Gather Important Documents: Make sure you have the title deed (escritura), latest property tax receipt (IBI), community of owners’ certificates (proving no outstanding fees), and up-to-date utility bills. If you’ve done renovations, have any permits handy. An Energy Performance Certificate (EPC) is legally required to sell – if you don’t have one, you’ll need to obtain it from a certified assessor.
- Check for Liens or Debts: Potential buyers (or their lawyers) will conduct a search on your property’s Land Registry record. Ensure there are no unexpected liens, embargoes, or unpaid mortgages beyond what you already know. If you still have a mortgage, you can either pay it off before sale or the buyer’s funds will be used to cancel it at closing.
- Estate Agent or Private Sale: Decide if you will use an estate agent to market your home. Agents in Spain typically charge around 3-5% commission (plus VAT) on the sale price, usually paid by the seller. Choose an agent with experience in the expat market if you go that route, or be prepared to handle marketing and viewings yourself in a private sale.
Signing a Contract with the Buyer
Once you find a buyer and agree on a price, it’s customary to sign a reservation contract or “arras” agreement:
- Arras (Deposit Contract): This private contract outlines the identities of buyer and seller, the property details, agreed price, and deadline for the final sale. The buyer typically pays a deposit (often 10% of the purchase price) at this stage. There are two types of arras; most common are arras penitenciales, where if the buyer backs out without cause, they forfeit their deposit, and if the seller backs out, they must return double the deposit to the buyer.
- Legal Review: Have your lawyer draft or review the arras contract to protect your interests. This contract can also specify who pays which costs, and any special conditions (for example, sale subject to the buyer obtaining a mortgage by a certain date).
Notary and Completion Day
The property sale is formally completed when both parties sign the escritura de compraventa (deed of sale) in front of a Notary Public:
- Notary Appointment: Coordinate a date with the buyer to meet at a notary’s office. The notary will prepare the draft deed in advance. Ensure your name, NIE, the price, and payment method are correctly reflected.
- Payments: On signing, the buyer pays the remaining balance. Usually this is done with a banker’s draft (cheque bancario) handed over at the notary. If you have an existing mortgage, a bank representative will attend to receive a cheque for the outstanding loan amount and will sign a cancellation deed.
- Handover: You’ll hand over keys after signing. It’s also common to sign an inventory if any furniture or appliances are included. Both buyer and seller (or their representatives) sign the deed, the notary verifies everything, and you officially transfer ownership.
- After the Sale: The notary will fax a notification of the sale to the Land Registry. The buyer is responsible for paying the transfer tax and registering the new deed, but as a seller, you should keep a copy of the signed deed and proof of payment for your records.
Taxes and Costs for the Seller
As a seller, be aware of the following fiscal aspects:
- Plusvalía Municipal: This is a local tax on the increase in land value, levied by the town hall. It’s calculated based on the property’s cadastral value and years of ownership. By law, the seller usually pays this tax (though it can be negotiated). It can range from a few hundred to several thousand euros depending on the location and how long you owned the property.
- Capital Gains Tax: If you made a profit on the sale (selling price minus purchase price and certain expenses), you may owe Spanish capital gains tax. For non-residents, the rate is a flat 19%. For residents, it’s 19-28% on a sliding scale of the gain.
- Non-Resident Withholding: If you are not a tax resident in Spain, the buyer is required to withhold 3% of the sale price and pay it to the tax authorities on your behalf. This is a payment on account of your capital gains tax. You will then file a tax form (Modelo 210) to declare your actual gain and either claim a refund or pay any additional owed above the 3% withheld.
- Exemptions: If you are a Spanish tax resident over 65 and selling your primary residence, or if you reinvest in another primary home in the EU/EEA, certain exemptions may apply.
- Agent and Lawyer Fees: Don’t forget the costs of any real estate agent commission and legal fees for your lawyer’s assistance. These are typically paid out of the sale proceeds.
Conclusion
Selling a property in Spain as an expat involves more than just finding a buyer – it requires careful handling of contracts, an understanding of local taxes, and coordination with banks and notaries. With the right preparation and professional help, you can avoid common pitfalls and ensure a successful sale. If you plan to sell your Spanish home, contact our property lawyer at Expat & Legal Spain. We will guide you through each step, from drafting contracts to calculating taxes, so you can complete your sale confidently and efficiently.
Sandra Márquez
CEO & Lawyer, Expat & Legal Spain