Capital Gains Tax When Selling Your Spanish Property as a Non-Resident

The 19% Non-Resident Capital Gains Rate

When you sell Spanish property as a non-resident, you pay capital gains tax at a flat rate of 19% on any profit. This applies whether you’re British, American, or from any other country outside Spain. The rate is the same regardless of how long you owned the property or the size of the gain.

Your taxable gain is the difference between your sale price and your acquisition cost, adjusted for certain expenses and improvements. If you bought a Costa del Sol apartment for €300,000 and sell it for €400,000, your initial gain calculation starts with that €100,000 difference.

Calculating Your Taxable Gain

Your acquisition cost includes more than just the original purchase price. You can add notary fees, registry costs, legal fees, and the transfer tax you paid when buying (either the 7% ITP on resales or 10% IVA plus 1.5% AJD on new builds). Keep all receipts from your purchase.

You can also deduct capital improvements made during ownership, but not regular maintenance. Installing a new kitchen or adding a pool counts; repainting walls does not. The improvement must be documented with invoices and must genuinely add value to the property.

Selling costs are deductible too: estate agent commission, notary fees for the sale deed, registry costs, and legal fees. If your agent charges 3% commission on a €400,000 sale, that €12,000 reduces your taxable gain.

The 3% Retention Requirement

Spanish law requires the buyer to retain 3% of the purchase price and pay it directly to the tax authorities when buying from a non-resident. This acts as a deposit against your capital gains liability. On a €400,000 sale, the buyer holds back €12,000.

The notary handling your sale will arrange this retention payment within 30 days of signing the escritura. You receive a certificate showing the amount retained, which you need for your tax filing.

If your actual capital gains tax is less than the 3% retained, you claim a refund. If it’s more, you pay the difference. If you made no gain or a loss, you can reclaim the entire retention amount.

Filing Modelo 210

You must file Modelo 210 with Spanish tax authorities within three months of the sale, even if no additional tax is due. This form calculates your actual capital gains liability and either claims a refund of excess retention or pays any shortfall.

The three-month deadline runs from the date of the sale deed signing, not completion or key handover. Miss this deadline and you face penalties, even if you owe no tax.

You can file Modelo 210 yourself through the Spanish tax office website if you have digital certification, or engage a Spanish tax adviser to handle it. The form requires details of your acquisition cost, improvement expenses, selling costs, and the retention certificate.

Exemptions and Special Cases

Spanish residents benefit from a primary residence exemption if they reinvest in another Spanish home within two years, but this does not apply to non-residents. There is no equivalent relief for non-resident sellers.

However, if you become Spanish tax resident before selling, you switch to the resident capital gains rules. Spanish residents pay capital gains as part of their income tax, with rates from 19% to 26% depending on total income, but gain access to the reinvestment exemption.

Properties inherited by non-residents get a stepped-up basis equal to the market value at death, effectively wiping out gains that accrued during the deceased owner’s lifetime. This can eliminate or reduce capital gains tax for heirs.

Double Tax Treaty Relief

Most countries have double taxation treaties with Spain to prevent the same gain being taxed twice. If you’re British, you typically pay the 19% Spanish tax and then claim credit against any UK capital gains liability on the same disposal.

US citizens face more complexity due to America’s worldwide taxation system. You still pay 19% to Spain but must also report the gain on your US tax return, claiming foreign tax credit for the Spanish payment. The timing differences between Spanish and US tax years can create cash flow challenges.

Each country’s treaty works differently, so check your home country’s position before assuming you can simply offset Spanish tax paid.

Record Keeping Essentials

Start documenting from day one of ownership. Keep purchase contracts, notary receipts, registry certificates, and all improvement invoices. When selling, retain estate agent agreements, marketing costs, legal bills, and notary fees.

Currency fluctuations add complexity if you bought in one exchange rate environment and sell in another. Spanish tax calculations use euro amounts, but your economic gain or loss depends on currency movements if your wealth is in pounds or dollars.

The Spanish tax office can request supporting documentation for up to four years after filing, so maintain organised records well beyond your sale completion.

How We Can Help

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