Capital Gains Tax (CGT)
What is Capital Gains Tax (CGT)?
The capital gains tax is the tax that is paid on the profits that you obtain once you sell any kind of asset like a property or land, or from an investment in the Spanish territory. Whenever the sale value is greater than the price you paid for the investment/asset for its acquisition, capital gains tax will be paid on that difference, the profit.
So if we assume that you purchased a property for 200.000€ and now you intend to sell. You find a buyer, and agree to sell for 400.000€. The resulting 200.000€ that you earn is the taxable amount to which you will apply the capital gains tax percentage.
However, the actual amount payable will depend if you are considered a Resident or a Non-Resident.
As a RESIDENT the following will apply :
- 19% for the first 6.000€ obtained as a profit
- From 6.000€ to 50.000€, the tax percentage is 21%
- From 50.000€ onwards 23%s Tax (CGT)?
Note that you will be considered a tax resident in Spain if you stay in the country for more than 183 days per year (6 months).
As a NON-RESIDENT the following will apply :
The general flat income tax rate for non-residents is 24%, or 19% if you are a citizen of an EU/EEA state.
Are there exemptions to Capital Gains?
- You will not have to pay CGT if the money that you earn from a property sale is reinvested, within 2 years, into the purchase of a new property which will become your main home.
- You will not have to pay CGT if you are over 65 years of age and the property you are selling has been your main residence for at least 3 years.
- You can reduce the gain by presenting official receipt for things like home improvements.
- There could be a tax relief if you purchased the property prior to 1995 subject to meeting the required criteria.
The above is intended as a guide only and you should always seek independent financial advise. We also recommend caution when using on line tax calculators. Spanish taxation is complex, and again, professional advise should be sought.