A non-resident seller is liable for payment of a 35% Capital Gains Tax on the profit of the sale of their property unless it was bought before January 1st 1987. However, there are exemptions available for those who have owned their property since 1994 and before. Also, the vendor can offset against the gain made on the sale other costs.

Reductions on the inflationary movements

This reduction is obtained by applying a percentage to the purchase price, raising the original price to the level of the value of the Euro today. This inflationary correction factor is applied to the entire purchase price, as well as to all costs surrounding the purchase. Likewise, improvements and extensions on the property will have to be updated inflation-wise.

• Costs of the purchase: these would include VAT of Transfer Tax, Plusvalía Tax (where paid by the buyer), Land registry and Notary fees, lawyer´s and real estate agent´s fees, where applicable.
• Extensions done on the property. These should not be confused with maintenance and conservation costs, as these are not deductible.

Examples of not deductible costs are repair or maintenance works, such as painting, repairs on heating systems, lifts, plumbing and so on. Also, the installation of iron bars, doors, double glazing windows and similar works on the property.

Examples of deductible costs are the installation of iron bars, doors, double glazing windows and similar improvements on the property.

Plusvalía Tax

Plus Valía is a Municipal Tax on the increase of the value of the land over the years.

From a little as a few hundred Euros for small properties recently purchased to as much as a few thousand Euros for larger estates purchased many years ago. This tax is calculated on the basis of two variables; ratable value of the property and number of years of ownership by the vendor. The market value or the sales price does not have an effect on this tax.

It is recommendable for the seller/legal representative to find out with the Town Hall the amount of tax they will demand.