Capital gains derived from the sale of real estate
Regulations: article 13.1.i) Law IRNR
In accordance with internal regulations, capital gains are considered income obtained in Spanish territory when they come from real estate located in Spanish territory.
Regulations: Additional Provision 4th IRNR Law
Capital gains derived from the sale of urban properties located in Spanish territory that were acquired from May 12, 2012 until December 31, 2012 are 50% exempt. This partial exemption is not applicable:
In the case of individuals, when the property has been acquired from or transferred to the spouse or any person related to the taxpayer by straight-line or collateral kinship, consanguinity or affinity until the second degree, inclusive, or from or to a company associated with the taxpayer or with any of the aforementioned persons through any circumstances established in Article 42 of the Commercial Code, regardless of the residence and the obligation to prepare consolidated annual accounts.
In the case of companies, when the property has been acquired from or transferred to a person or company associated through any of the circumstances established in Article 42 of the Commercial Code, regardless of the residence and the obligation to prepare consolidated annual accounts, or from or to the spouse of such person or from or to any person related to him/her by straight-line or collateral kinship, consanguinity or affinity until the second degree, inclusive.
Exemption for reinvestment in habitual residence for taxpayers residing in another Member State of the EU , Iceland, Norway and, since 07-11-2021, Liechtenstein:
Regulations: Additional Provision Seventh IRNR Law
In the case of taxpayers residing in a Member State of the European Union, or the European Economic Area with effective exchange of tax information (with effect from July 11, 2021, regulatory references made to States with which there is an effective exchange of tax information are understood to be made to States with which there are regulations on mutual assistance regarding the exchange of tax information in the terms provided for in Law 58/2003, of December 17, General Tax, which is applicable. See Annex V ), the capital gains obtained from the transfer of what was your habitual residence in Spain may be excluded from taxation, provided that the total amount obtained from the transfer is reinvested in the acquisition of a new habitual residence. When the reinvested amount is lower than the total of the amount received in the transfer, only the proportional part of the capital gain obtained corresponding to the reinvested amount will be excluded from taxation.
When the reinvestment has occurred before the date on which the tax return is to be filed, the reinvestment, total or partial, may be taken into account to determine the corresponding tax liability.
Notwithstanding the above, the withholding obligation on the part of the purchaser of the property will apply (through form 211) as well as the obligation to submit the declaration (form 210 subsection H) and pay the corresponding tax debt.
In the self-assessment form 210, code 33 will be indicated as the type of income, if the reinvestment has occurred before the transfer, or code 34, when the reinvestment occurs after the transfer.
If the reinvestment has occurred after the date on which the declaration must be submitted, a total or partial refund of the tax debt entered corresponding to the capital gain obtained may be requested by submitting the application model approved in Order HAP /2474/2015, of November 19 ( BOE of November 24).
In accordance with the Agreements signed by Spain, gains derived from the sale of real estate located in Spanish territory may be subject to taxation in Spain.
Regulations: articles 24, 25 and 26 IRNR Law
Income obtained without the mediation of EP must be taxed separately for each total or partial accrual of the income subject to tax.
The tax base corresponding to the capital gains will be determined by applying, in general, to each capital alteration, the Personal Income Tax rules. Profits will be calculated by the difference between the transmission and acquisition values.
In onerous transfers, the acquisition value will be made up of the actual amount for which the property was acquired, plus the cost of investments and improvements (1) , if applicable, carried out (without counting, for these purposes, the costs of conservation and repair) to which the amount of the expenses (commissions, Notary Public, Registry, etc.) and taxes inherent to the acquisition will be added ( Asset Transfers and Documented Legal Acts, VAT or Inheritance or Donation Tax if the acquisition was made free of charge), excluding interest, paid by the now transferor. The amount thus determined will be reduced, when appropriate, by the amount of the regulatory amortizations carried out, calculating, in any case, the minimum amortization (2)
(1) In the case of assets on which improvements have been made in a year other than that of their acquisition, it will be necessary to distinguish the part of the transfer value that corresponds to the asset and the improvement or improvements made, in order to determine, separately and independently, both the capital gains or losses derived from one or the other, as well as the reduction that, if applicable, is applicable. For these purposes, the values and dates of acquisition will be taken as those that correspond, respectively, to the asset element and each of the improvements made. (Back)
(2) "Fiscally deductible" amortizations correspond to properties used for economic activities, leased or subleased properties, and real rights of use and enjoyment of real estate. In these cases, the minimum amortization will be computed, regardless of its effective consideration as an expense.
For leased properties, the amount of the minimum amortization is determined by applying the percentage of 3%, on the highest of the following values: Satisfied acquisition cost or the cadastral value, excluding the value of the land. When the value of the land is not known, it will be calculated by prorating the acquisition cost paid between the cadastral values of the land and the construction for each year. In the case of real estate acquired for profit, the acquisition cost is the value of the property in application of the Inheritance and Donation Tax rules or its value verified in these liens, without including the value of the land, and the amount of the taxes paid plus the expenses inherent to the acquisition and, where applicable, all of the investments and improvements made. (Interpretive criterion established by the Supreme Court in ruling number 1130/2021, of September 15). (Back)
In the case of transmissions produced since January 1, 2015, the update coefficients have been eliminated.
The transfer value will be the actual amount for which the sale has been carried out, less the amount of the expenses and taxes inherent to the transfer that it was on behalf of the seller.
When the acquisition or transfer had been for profit or free of charge (inheritance, legacy or donation) the previous rules will be applied, taking as the actual amount of the respective values those that result from the application of the Inheritance and Donation Tax rules, without exceeding the market value.
The difference between the transfer value and the acquisition value thus determined will be the gain which is subject to taxation.
Regulations: Sole transitional provision IRNR Law
However, in the case of natural persons , if the property was acquired prior to December 31, 1994 , the previously found gain may be reduced as a transitional regime is applicable.
In these cases the following rules must be taken into account:
Only the part of the capital gain generated prior to January 20, 2006 would be susceptible to reduction.
Rule 1. Calculation of the part of the capital gain generated before 01-20-2006
The part of the capital gain susceptible to reduction is determined based on the proportion represented by the days elapsed from the date of acquisition to January 19, 2006 with respect to the total days elapsed from the date of acquisition to the date of transmission.
Rule 2. Calculation of reduction (see example )
The part of the profit generated prior to January 20, 2006 will be reduced, if applicable, as follows:
The number of years between the purchase date of the element and 31 December 1996 will be calculated and rounded up.
The transfer value of all the assets to whose capital gains this same transitional regime would have applied, transmitted from January 1, 2015 to the date of transfer of the assets, will be calculated. ( When this result is greater than 400,000 euros, no reduction will be made ).
When the sum of the transfer value of the asset element and the amount referred to in letter b) above is less than 400,000 euros, the part of the capital gain generated prior to January 20, 2006 will be reduced by the amount resulting from apply 11.11% for each year of stay of those indicated in letter a) above that exceeds two.
When the sum of the transfer value of the asset and the amount referred to in letter b) above is greater than 400,000 euros, but the result of the provisions of letter b) above is less than 400,000 euros, the reduction will be made. to the part of the capital gain generated prior to January 20, 2006 that proportionally corresponds to the part of the transfer value that added to the amount of letter b) above does not exceed 400,000 euros.
If the taxpayer has acquired the property on two different dates or the property has been subject to improvement, the calculations will have to be carried out as if they were two capital gains, with different retention periods in the application of the reduction coefficients and different coefficients. update.
The applicable tax rate is 19%
Deductions: Only the following may be deducted from the tax rate:
Deductions for donations, in the terms provided in the Personal Income Tax Law and in the Law on the tax regime of non-profit entities and tax incentives for patronage.
The retention carried out by the purchaser of the property.
Withholding on account
Regulations: article 25.2 IRNR Law; article 14 IRNR Regulation and article 8 Order EHA /3316/2010, of December 17, which approves self-assessment models 210, 211 and 213 of the IRNR.
The person who acquires the property, whether resident or not, is obliged to retain and pay into the Public Treasury 3% of the agreed consideration. This withholding has for the seller the nature of payment on account of the corresponding tax for the income deriving from this transfer.
The purchaser will enter the withholding using form 211, within one month from the date of transmission, and will deliver to the non-resident seller a copy of form 211, so that the latter can deduct the withholding from the tax quota. resulting from the declaration of profit. If the withholding is greater than the tax amount, a refund of the excess may be obtained.
Example: Transfer of a property on December 31, 2019 for an amount of 300,000 euros, acquired on January 1, 1991 for an amount equivalent to 100,000 euros. The taxpayer previously transferred, on February 1, 2015, another asset element (whose transfer value was 200,000 euros), to whose gain the transitional regime was applied.
Determination of the gain subjected to taxation:
Capital gain (Difference): 300,000-100,000 = 200,000
Gain generated until 19/01/2006: €103,824 (1)
Gain subject to reduction: €69,216 (2)
Reduction: €30,759.6 (3)
Reduced capital gain subject to taxation: €169,240.4 (4)
Notes to the example:
- Nº of days elapsed between purchase and sale dates: 10,591
- Nº of elapsed days between purchase dates and 19/01/2006: 5,498
Calculation: (200,000x5,498) /10,591 =103,824 (Back)
Limit of transfer values: €400,000
Accumulated addition of transfer values of other assets transferred from 1 January 2015 until the date of the current transfer: €200,000
Although the value of the current transfer is €300,000, as €200,000 of the limit of €400,000 were already used in the previous transfer, there only remain €200,000 to use in the current transfer.
The part of the gain generated until 19/01/2006 which corresponds proportionately to a transfer value of €200,000 is subject to reduction.
Calculation: (103,824 x200,000) / 300,000 = 69,216 (Back)
Period of permanence in the equity prior to 31-12-1996 (between purchase date and 31/12/1996, rounded up): 6
Nº of years exceeding 2: 6-2 = 4
Percentage of reduction: 4x11.11% = 44.44%
Calculation: (69,216x44.44) / 100 = 30,759.6 (Back)
(4) Calculation: Difference-Reduction=200,000-30,759.6 =€169,240.4 (Back)