- Personal income tax on capital gains

- Capital gains: land becomes more expensive

- Real Estate Tax (IBI)

If you have recently sold a property, you are probably experiencing great satisfaction, as you have been relieved of the possible problems associated with the property and have obtained an income from the sale. However, this happiness may be short-lived, as you must comply with your tax obligations correctly, and failure to do so may land you in trouble. In this guide, we will explain what taxes you must pay on the sale of a property, when they apply and how to calculate them.

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Personal income tax on capital gains

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Every owner must declare the profits obtained from the sale of a property in the Personal Income Tax (IRPF). This is done in the tax return of the fiscal year following the year of the transaction, although there are circumstances in which the declaration may be exempt. These are:

- If it is a dation in payment, although you will have to prove that you do not possess other assets sufficient to cover the debt contracted.

- If the transaction involves reinvestment in a primary residence. To do this, you must sell your current home and reinvest the proceeds in a new primary residence.

- If the sale is made by a person over 65 years of age and refers to a habitual residence, excluding properties used for investment purposes or as second homes.

- If the sale is made by a person over 65 years of age and he/she allocates the proceeds to an annuity.

Once you understand these conditions, you must calculate the capital gain obtained from the sale of your home. This is calculated by comparing the acquisition value of the house with the transfer value, that is, the difference between the purchase price and the sale price.

To calculate the transfer value, you must consider the sale price and the expenses associated with the transaction, which include real estate agency fees, in case of intermediaries, and the costs of cancellation of the mortgage registration.

The calculation of the acquisition value of the property is similar, taking into account the purchase price of the property and the expenses related to the purchase, such as notary, registration and transfer tax costs.

If the result is positive, the Treasury considers that you have obtained a capital gain and you must pay tax on it. In 2023, the tax rates to be applied are as follows:

- 19% on the first 6,000 euros of profit.

- 21% for earnings between 6,000 and 50,000 euros.

- 23% for earnings between 50,000 and 200,000 euros.

These percentages are applied progressively.

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Capital gains: land becomes more expensive

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The municipal capital gain refers to the Tax on the Increase in the Value of Urban Land (IIVTNU). This municipal tax affects only the land on which the property is located and is calculated according to the cadastral value and the time you have owned it.

The calculation of goodwill involves two methods:

Objective method:

- Cadastral value of the land.

- Coefficient established by the municipality according to the time of ownership.

- Percentage fixed by the City Council.

Actual method:

- Purchase price of the home.

- Sales price.

- Percentage of the cadastral value.

- Percentage fixed by the City Council.

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Real Estate Tax (IBI)

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The sale of a property involves other taxes in addition to the IRPF and the capital gains tax, such as the Real Estate Tax (IBI). This municipal tax is paid annually from the acquisition of the property. As for who must pay the IBI in the year of sale, generally it is the owner as of January 1. However, many times, buyers and sellers reach agreements to divide the payment of the tax in that specific year.

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