Who this applies to
This guide is written for owners of property on the Costa del Sol who are tax resident abroad — the most common situation among foreign sellers. If you are resident in Spain, partly different rules apply, above all for the withholding and the capital gains tax. If you are unsure where you are tax resident, start with the guide on tax residency.
The three items, in the order they appear
| Item | What it is | Who pays, to whom |
|---|---|---|
| Withholding (retención) | A part of the price that the buyer holds back on completion day and pays to the Agencia Tributaria as an advance on your capital gains tax. | The buyer pays it in, in your name. You get a receipt that you will need later. |
| Plusvalía municipal | A municipal tax on the increase in land value during the time you have owned the property. Nothing to do with your actual gain — but without a gain it should not be paid. | The seller. If you are not resident here the buyer can be held liable in your place, and therefore often withholds the amount on completion. |
| Tax on the gain | State tax on the difference between what you sold for and what you bought for — with deductions for costs at both ends. | You, through your own return after the sale. The withholding is credited against it. |
We do not put percentages and deadlines on a web page. They depend on where you are resident, on the year and on the municipality — and they change. Go by the Agencia Tributaria, your town hall and your gestoría. We can put you in touch with one who works in English.
The withholding — the advance you get back
On completion day you do not receive the whole price. The buyer holds back a part and pays it to the tax agency within a short deadline, using form Modelo 211. It is not a tax in itself but an advance on the tax you owe on the gain. If the advance is larger than the tax, you get the difference back — but only if you file your own return and claim it.
Three things to do yourself:
- Ask for the receipt. The buyer must give you a copy of the paid Modelo 211. Without it you cannot claim the money back.
- Declare the gain in time. The deadline runs from completion and is short. It is that return that decides whether you pay more or get money back.
- Keep the Spanish bank account. The refund takes many months and is normally paid to a Spanish account.
Plusvalía — the town hall’s tax
Plusvalía is calculated on the increase in land value according to the municipal register, not on what you actually made. Since the rules were reformed there are two ways of calculating it, and you may choose whichever comes out lower. If the property has not increased in value, no plusvalía is payable at all — but it is you who must show that, with the purchase and sale deeds, within the town hall’s deadline.
Because the buyer can be held liable when the seller is not resident in Spain, it is common for the amount to be withheld on completion and paid in by the buyer’s lawyer. Make sure the contract says exactly how that will be done.
The tax on the gain — and what you may deduct
The gain is the difference between the sale price and the acquisition cost. This is where many people pay too much, because they forget what may be added to the purchase price and deducted from the sale price:
- At purchase: the transfer tax or VAT you paid, notary, registry, lawyer.
- In between: documented improvements to the property — not maintenance, but things that raised its value, with invoices.
- At sale: the agent’s fee, plusvalía, the energy certificate, lawyer.
If you no longer have the invoices you cannot deduct the costs. Find them before you set the price — they affect your net as much as a negotiation does.
Before you put the property on the market
- The years you have owned the property must be declared. If Modelo 210 is missing for any year it surfaces now, with a penalty and interest.
- IBI and community fees paid, and a certificate from the community that nothing is owed. The notary requires it.
- Energy certificate — compulsory before advertising.
- Power of attorney, if you do not intend to travel. It should cover the sale and the tax handling afterwards.
- Is the property inherited? Then the inheritance must be declared and the title in your name before you can sell. Read the guide on inheritance first.
What you get from us
Before you decide, we work out your net: price minus fee, plusvalía, withholding and tax, in your situation. Not to win the instruction, but so that you know what actually lands in your account. Request a valuation and we start there.