When selling a property it’s normal to have plans for the money you hope to get from the sale, and thus it’s important to know what the costs involved with a property sale are. This section gives a brief overview of these sale costs.
Estate agent’s commission
The level of commission an estate agent (inmobiliaria) will ask for depends on the value of the property and also how competitively priced for sale the property will be.
Typically estate agents will want around 3% of the sale price but this will often be higher for cheaper and/or more remote properties (it’s rarely less than 3000€).
It can be possible to haggle this down if you price a property to sell quickly and also if you offer the estate agent exclusivity (ie. if it sells to anyone at all during a defined time period then they get their commission).
What you get for this money is the agent advertising the property and doing viewings, but also you get an awful lot of checks and paperwork included, and all on a no sale, no fee basis.
You can find more detail about this topic in our sales process guide.
If you use a lawyer to handle the legal aspects of a property sale you can expect to pay 1.000-2.000€, mostly depending on which lawyer you use and the value of your property since many work on the basis of fees of 1% of the property’s value (something which bears being questioned because there isn’t really any extra work involved for more expensive properties).
A widely held and some would say sage opinion is that this is largely wasted money as a lot of this fee will be for duplicating checks that your real estate agent is perfectly capable of doing and will do anyway, and as sales must be notarised you have the added security of the notary (who will normally be as competent as most lawyers) checking everything.
Purchase contracts are very standard and estate agents are as arguably capable of using copy and paste functions as lawyers, so the view exists that the only need for a lawyer if you are selling a property is to advise on and incorporate in the sales contract:
- Any special clauses you want
- Any special clauses the buyer wants
- Any issues related to guarantees of the property you are required to give.
Lawyers also charge irrespective of whether you sell your property or not, unlike estate agents.
Compulsory energy efficiency certificate
An energy certificate for your property is required under EU law. When the requirement for them was first introduced they were quite expensive, but as it’s easy to register to be able to produce these things they are now quite competitively priced and typically you can reckon on between 50€ and 150€ depending on the size of your property.
Most buyers still don’t pay all that much attention to these, particularly for old properties which all parties know are energy inefficient. If, however, your property is energy efficient then it’s worth getting this certificate at the earliest opportunity and using it as a selling point.
This is a tax payable to the local council on the increase in value of the plot on which the property is built, the justification for this being along the lines of the value of the plot having been increased as a result of improvements (drainage, pavements, streetlighting, etc) paid for by the local council.
It is calculated using a fairly complex formula where the Catastro valuation (which often bears no relation to market value) is multiplied by a percentage specific to the local council and the number of years the property was owned for to provide a base for calculation which is then multiplied by a further percentage to give the actual amount payable.
As this tax varies according to the Catastro valuation (which may only be rebased eg. every 20 years, but then massively) and the number of years the property has been owned for it is highly variable, but a typical bill would be 1.000-2.000€ for an average sized plot that has been owned for 5-10 years.
This tax is normally paid after a sale has been agreed and a deposit paid, and the notary will typically want to see the receipt for it to complete the sale, although in some instances (such as buying in a hurry at a firesale price before the bank repossesses the property) the buyer may agree to accept the liability for this tax.
Capital gains tax
This tax varies extensively depending on whether you are a Spanish resident or not. If you are then any capital gain from the sale of your primary residence (note, you must have been registered living at this address for the 3 years preceding the sale) reinvested in a new primary residence within 2 years (currently extended to 3 years due to the crisis) is not taxable for capital gains, although if you sell a second home or don’t reinvest all the money from a sale in a new primary residence this tax will apply at the rate of 20-24% (or possibly higher as “temporary” increases to capital gains tax have occurred in recent years).
If you are a non-resident then, by definition, the Spanish property you are selling is not your primary residence and therefore you are liable for Spanish capital gains tax at 20-24% (or possibly higher) on any capital gain.
A capital gain is calculated by deducting (purchase price + cost of receipts documented improvements where IVA was paid + costs of purchase and sale fees such as agent’s fees, notary fees, lawyers’ fees, plusvalia tax, energy certificate, etc.) from the sale price. The resulting figure times the applicable rate is your capital gains tax liability.
By law, and the notary will not complete the sale without this, the buyer must pay 3% of the purchase price of the property to the Spanish tax office as a withholding tax to cover potential capital gains liabilities of the seller. The seller then has to make a Spanish tax declaration and apply to get any remainder of this 3% reimbursed, which can often take up to a year. If the capital gains tax liabilities are not covered by this 3% withholding then you can expect to be chased for the remainder by the Spanish tax office.
In summary, then, even if you sell at a loss it is likely to take a year to get at 3% of the sale price, and if you sell at a profit you can expect a sizeable bill, especially if you (as was common until recently) underdeclared the purchase price and/or made property improvements without permissions (and 4% improvement tax paid) and IVA paid receipts, as this will reduce the deductions you can make for capital gains from the sale price.
As notary and re-registration fees are the responsibility of the buyer (see our purchase finances section), this more or less covers it for sellers. You are, though, expected to know all of the above and to do a lot of it within a short space of time (30 days) and so thorough research or getting good advice and/or assistence (your estate agent won’t want to be involved in your capital gains declaration) for this phase is important.
Galiciaproperty unfortunately can’t offer a tax advice service as we don’t have sufficient expertise in Spanish tax matters.