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Capital Gain Taxes

Capital Gain Taxes

1. Introduction

Capital gains apply if you sell something for 150 that you bought for 100.

The tax man considers the difference of 50 as income and wants to have part of it in the form of taxes. There are many different kinds of capital gains; you can have them when selling shares, a company, certain rights or - on selling privately owned property.

In this Short Information we are addressing ourselves only to the capital gains on selling a property in Spain, by residents and non-residents.

In all cases you start with the value declared in your "escritura de compra/venta" (title deed of purchase/sale). To this value can be added the costs of acquisition, (the transfer taxes paid - IVA or ITP -, notary fees and registration costs).

Then on the total costs of buying the property, you apply the coefficients for inflation. Since the inflation varies every year, it is logical that the coefficients are being determined in the yearly state budgets. In the state budget for 2002 the following coefficients were established:

For properties bought in 1997: 1,1016
For properties bought in 1998: 1,0802
For properties bought in 1999: 1,0608
For properties bought in 2000: 1,0404
For properties bought in 2001: 1,020 etc...

Then you take the sales price declared in the new escritura, and you subtract the sales costs (advertising costs, sales commissions, and the municipal Plus Valia Tax). Subtracting the value in the old escritura + registration costs, from the value in the new escritura - the sales costs, you have the brut capital gains

 

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