When selling your country property in Southern Spain, Andalusia, you need to be well prepared. It is important to know what costs are involved. You may ask: What are the costs of selling a country property in Andalusia? In this guide we have outlined them for you.
- Legal fees
If you instruct your lawyer to assist you, they normally charge 1% of the sale price plus IVA. This is considered as ‘selling costs’ by the tax office and can be used to reduce capital gains.
- Estate Agent’s Commission
When we list your property we charge a fee of 5% of the previously agreed sale price, plus IVA. This cost is payable at completion. If another agency is involved in the sale, we share our commission with them. These costs can be deducted when calculating the Capital Gains Tax.
- Capital Gains Tax (Impuesto sobre el Incremento Patrimonial)
There is a tax to be paid to the Spanish tax office over the value gained at the sale. Both residents and non-residents have several possibilities for deductions. It goes too far to specify these here. We highly recommend to calculate with your lawyer or fiscal adviser what the tax is to be paid, so you are well prepared when accepting an offer.
- Withholding tax
When the vendor is a non-resident in Spain or a resident that cannot prove fiscal residency, the purchaser’s lawyer will withhold 3% of the purchase price and pay it directly to the Tax Office within a month as a payment in advance on account of Capital Gains Tax. This amount can be reclaimed if the calculated tax to be paid would be less than the 3%.
- Municipal Tax (Plusvalía)
The plusvalía is paid to the municipality when a property is sold. This fee is based on the increase in value of the land in the cadastre during the time that the seller has owned the property. The tax is calculated in accordance, so it does not depend on the selling price. By law, the vendor ought to pay the Plusvalía.
If you are a non resident this amount will be withheld by the purchaser to pay into the tax office. Your lawyer can calculate the amount to be paid as soon as you know the date of completion. If you do not know the date but you need to know the amount, your lawyer can make an estimate with a fictive date.
- Cancelation of mortgage
If you have a mortgage on your property the costs for cancellation (bank, notary and registry) will be on your account.
- Notary and registry
Normally the purchaser pays the notary and registry costs. If it is not agreed upfront some lawyers request sharing these costs ‘según ley’, according to the law. In that case, the costs will be shared. Villas & Fincas tends to mention in the reservation agreement that these costs are for the purchaser.
- Potential documentation
If the legal paperwork of your country property is not in order, you will be required to pay for the costs to bring them up to date. Sometimes it is asked to adjust the lacking documentation before completion. In other occasions it will be withheld from the purchase price, or kept in escrow at completion.
- Bank costs
Please be aware that your bank can charge you for cashing a bankers draft or for transferring large amounts to an account abroad. Check this beforehand and negotiate an acceptable rate if that is the case. If you are transferring money to a country with another currency it could be interesting to use money exchange services, again to avoid unfavourable exchange rates and costs.
Danielle Ernstsen | 14th March 2023
