Selling a home involves paying a set of taxes in Cumbre del Sol, on top of the expenses that come with the process.
In this article, we explain the details.
Selling a home in Cumbre del Sol: What taxes need to be paid?
Just as with buying a home, selling one incurs ownership expenses, some of which are national and others municipal. Let’s have a look at the main ones:
Real estate tax (IBI)
The real estate tax is a municipal tax that is paid annually. In order to sell a home in Cumbre del Sol, you need to be up-to-date with your payments in the town of Benitachell (Alicante).
The rate for this tax depends on each municipality, the floor area of your home and the area in which it is located. Some places add rubbish collection on top of this, whereas in others it is included in the total amount. What the real estate tax does is charge the owners of the rights “in rem” on any property.
It is important to specify that, in general, in these transactions it is the seller who is required to pay the real estate tax for the year in which the transaction takes place. At least, this is what the law states, but in Cumbre del Sol, it’s common for all these expenses (rubbish collection, community fees, real estate tax) to be calculated at the time of the sale.
Municipal capital gains tax
Another municipal tax, this time charging the increase in value of the urban plot. The capital gains tax has been a matter of controversy on several occasions, as it was drafted in such a way that it would be paid in every situation, i.e., it was also compulsory for those who sold at a loss.
This increases considerably over the years, and therefore, the longer you have had your home, the more you are going to have to pay. Rustic plots, however, are exempt from this tax.
How much do we need to pay in capital gains? To find out the exact amount we need to pay, most town councils have a municipal website to calculate the exact price. The information that it will ask us for includes the land registry title number for our home, the date of sale, the land registry value of the plot and the year of reference. We will also need to know the exact date that we bought this property.
If there are several owners, or the property was bought piecemeal on different dates, you’ll need to take this into consideration to find out how much this tax amounts to.
Personal income tax
A state tax which is declared on income, specifically in the financial year in which the sale takes place. It is incorporated in the personal income tax base and is, along with the capital gains, the statement of capital that you have gained or lost when selling a property.
How is this tax calculated? By applying the percentage established from the capital gains that you obtained at the time of the sale, minus the initial purchase value. Given that this percentage varies depending on the year, you would need to adjust the values and adhere to the year when the transaction took place.
If you are not a resident in Spain, the State retains 3% of your personal income tax from the sale value of the property shown in the deed. This is the tax method on capital gains adopted for owners who live abroad.
Personal income tax exemption cases
There are some circumstances due to which we may be exempt from paying personal income tax when selling our regular home. These are as follows:
- If we use the capital gains from the sale to buy a new home within a period of two years.
- When the sale of the property is made by owners over 65 years of age or owners with a degree of dependency. If you use an estate agent in Cumbre del Sol, we can provide you with more advice on this.
- If you have not obtained any capital gains on the sale.
- Dation in payment. This is a legal method that consists of handing over your property to the bank if you are not able to assume the mortgage repayments.
In short, selling a home is subject to paying a series of taxes in Cumbre del Sol, some of which are municipal and others national. These expenses include capital gains, real estate tax and personal income tax, although the last of these can be avoided under certain conditions. If you have any questions about this, call us and we’ll help you!