Selling Property in Spain
Selling your Costa del Sol property? Here is everything you need to know about the 3% retention, capital gains tax, plusvalía and your legal obligations as a non-resident seller.
Spain has specific tax rules for non-residents who sell property. Unlike resident sellers, who declare their capital gain in their annual income tax return, non-residents are subject to a withholding mechanism and a separate tax regime under the Impuesto sobre la Renta de No Residentes (IRNR). Understanding these rules before you go to market — not after you receive an offer — allows you to plan accurately, avoid surprises at the notary table, and ensure you comply fully with your obligations to the Spanish Tax Agency (Agencia Estatal de Administración Tributaria, AEAT).
A typical sale process from accepting an offer to completion runs six to twelve weeks, depending on whether the buyer is obtaining a mortgage, any title or legal issues that arise during due diligence, and notary availability.
This is the first and often most surprising obligation for non-resident sellers. Under Article 25.2 of the IRNR Law, when a non-resident sells a Spanish property, the buyer is legally required to withhold 3% of the agreed sale price and pay it directly to the Spanish Tax Agency within one month of the sale, using form Modelo 211. The buyer does not pay this amount to the seller — they pay it to the tax authorities on the seller's behalf.
This 3% is not the tax itself. It is an advance payment (pago a cuenta) towards the non-resident capital gains tax that the seller will ultimately owe. The seller then files their own capital gains tax return (Modelo 210) and either:
The practical effect is that the seller receives 97% of the agreed price at notary completion, not 100%. Your lawyer must account for this in the financial calculations before you accept an offer, so that you are not caught short if you have a mortgage to repay or other financial commitments from the sale proceeds.
The capital gain is calculated as the difference between the acquisition cost and the sale price, with certain deductions permitted on both sides.
Acquisition cost includes the price paid when you bought the property, plus all costs and taxes paid at the time of purchase: notary fees, Land Registry fees, transfer tax (ITP) or VAT/stamp duty (IVA/AJD) if it was a new build, and any capital improvements made to the property (not maintenance or repairs — only structural improvements or additions that permanently increase the value or surface area of the property, supported by invoices).
Sale proceeds are the declared sale price, minus selling costs: estate agent commission, your lawyer's fees for the sale, and any costs associated with cancelling a mortgage on the property.
The current capital gains tax rate under IRNR is 19% for residents of the EU, Norway, Iceland and Liechtenstein. For residents of non-EU countries (including, since Brexit, UK nationals who are not EU residents), the rate is also currently 19% — a rule that has been equalised in recent years. Your lawyer can confirm the rate applicable to your specific situation based on your country of tax residency.
The capital gains tax return must be filed using Modelo 210, typically within three to four months of the date of sale. Your lawyer will prepare and file this on your behalf and, where applicable, apply for any refund of excess retention from the Tax Agency.
In addition to the national capital gains tax, sellers are liable for the Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana — universally known as the plusvalía municipal. This is a local tax levied by the town hall, calculated on the increase in the cadastral value of the land element of the property (not the building) over the period of ownership.
Historically, plusvalía was calculated using a formula based purely on the number of years of ownership and the current cadastral value of the land, regardless of whether the property had actually increased in market value. This led to well-documented cases of sellers being charged plusvalía even on properties sold at a loss.
Following a landmark ruling by the Spanish Constitutional Court in October 2021, the previous calculation method was declared unconstitutional. New legislation came into force in November 2021 giving sellers two calculation options: the traditional formula (based on cadastral value and time); or a new formula based on the actual increase in market value. Sellers pay whichever figure is lower. Crucially, if there is no real gain on the land, no plusvalía is payable.
The amount and calculation method vary between municipalities, and the tax must be settled with the local town hall within 30 days of the sale. Your lawyer will calculate the figure and manage payment on your behalf.
Before putting your property on the market, you are legally required to obtain a valid Certificado de Eficiencia Energética (energy performance certificate). This document, prepared by a certified assessor, rates the property on a scale from A (most efficient) to G (least efficient) across two metrics: energy consumption and CO₂ emissions. The certificate is valid for 10 years.
You cannot legally advertise the property — online or in print — without displaying the energy rating. The certificate must also be provided to the buyer at or before completion and is referenced in the title deed. If you do not have a current certificate, your lawyer can arrange for a certified assessor to visit the property and issue one.
If the property forms part of a community of owners (comunidad de propietarios) — which covers the vast majority of apartments, townhouses and urbanisations on the Costa del Sol — the seller is required to provide a certificate from the community administrator confirming that all community fees (cuotas de comunidad) are paid up to date and that there are no outstanding debts owed by the seller to the community. This certificate is signed by the community president and administrator and presented at the notary on the day of completion.
If there are outstanding community debts, these must be settled before or at completion. The buyer has the right to withhold from the sale price an amount equal to the outstanding debt, or to refuse to proceed until it is cleared.
The seller must also provide evidence that the Impuesto sobre Bienes Inmuebles (IBI) — the Spanish equivalent of council tax or local rates — is fully paid up to date. The notary will request the last IBI receipt at completion. If there are arrears, they attach to the property, not just to the seller, meaning the buyer could be held liable — so buyers and their lawyers will insist on clearance.
If the property has an outstanding mortgage, this must be cancelled at or before completion. There are two typical approaches: the buyer's bank pays off the outstanding mortgage balance directly to the lender as part of the transaction, with the remaining balance going to the seller; or the seller pays off the mortgage from their own funds prior to completion. Either way, the formal cancellation of the mortgage charge in the Land Registry must be arranged — this requires the lender to issue a certificate of full discharge (carta de pago) and for a notary deed of cancellation to be executed and registered. Your lawyer will coordinate this process with the lender and the notary.
We advise non-resident sellers on every aspect of the Spanish sale process — from calculating your tax position before you accept an offer, to filing your capital gains return after completion. Contact us today.