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Taxes on Foreigners in Spain

Taxes on Foreigners in Spain

8. Capital gains tax

Is in reality part of your income tax. It refers to increases in value of your assets. For property it is calculated as the difference between the value declared in your purchasing escritura and the value to be declared in the sales escritura with certain reductions for cost of registration and sales commission.

Moreover, the capital gains are reduced in accordance with the number of years you have had the property in an escritura. This is the rule for properties bought before the end of 1996. F or the years from new legislation in 1996, an inflation correction figure on the investment mu st be used. There are no capital gains tax on properties registered on an unchanged title deed from before the end of 1986.

A resident selling his main residency to buy another home, can write off the costs of the purchase of the new home from the capital gains in accordance with a special calculation. Never make the title deed to the new home before you have made the title deed for the sale of the previous one! Non-resident vendors must permit that the buyer makes a retention of 5% in the registered sales price, and pay this to the tax authorities as a guarantee for tax payments. A retention need not be made if the vendor has bought the property in an "escritura" previous to 31 December 1986. A resident need not make a retention and includes the capital gains (or losses) in his income tax return.

 

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