Selling a house or an apartment implies facing a series of procedures that should be known to avoid complications in the real estate sale process .
The payment of taxes is part of these cumbersome procedures and non-compliance can generate serious problems with the Public Administration.
Among the best known taxes that must be paid are those corresponding to the Personal Income Tax, known as Personal Income Tax , and the Tax on the Increase in the Value of Urban Land, known as municipal capital gain .
But are not the only ones. In the same way as these two charges, other taxes must also be paid when selling a house that are mandatory, such as the Real Estate Tax.
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Taxes paid when selling a home
When a house or apartment is sold , the following taxes must be paid:
Personal Income Tax – Personal Income Tax
The Personal Income Tax (IRPF) is the most widely known tax, since we all submit to it once a year if we meet the requirements that make its presentation essential.
Its calculation, in this case, is made based on the capital gain, if there is one. Payment is made at the time the income statement is made, just the year after the property is sold.
The capital gain , which is what determines the payment of this tax, is that obtained when there is an economic benefit from the sale of the property, that is, when it is sold at a price higher than the cost at the time of acquisition.
Not only are acquisition and transfer prices taken into account, but more complex calculations have to be made: we must determine the net acquisition and transfer values .
Calculate the transmission value and the acquisition value
To know the value of the transfer, the taxes and expenses that it has caused the seller, such as the real estate agency fees, must be subtracted from the total sale price .
The acquisition value must also be determined. This is calculated by adding the price paid at the time of purchase, plus the taxes and expenses derived from said purchase. To these expenses can be added the investment and improvement works carried out in the property, but not the mere repair and conservation works.
In the event that the transfer value is greater than the acquisition value, it is considered that there is a capital gain and, therefore, the collection of personal income tax is applied.
This represents 19% of the first 6,000 USD that are obtained in profit, 21% between 6,000 to 50,000 USD, 23% when the profit is between 50,000 and 200,000 USD and, finally, 26% if there is a profit more than 200,000 USD.
Otherwise, if the acquisition value has been greater than the transfer value, a gain is not obtained but a capital loss . In this situation, the transaction must be declared, but the payment of this tax is not made.
Exemptions from paying income tax for the sale of a house
Among the tax cases when selling a house, the cases exempt from paying personal income tax are the following:
- When the house or flat that is being sold is the main residence and the money from the sale will be reinvested in the purchase of another home (in the next 2 years), which will also be a habitual residence.
- In the event that the money is not reinvested in its entirety, but only a part, the proportional part reinvested will be considered exempt.
- When the seller is over 65 years of age and sells his habitual residence, even if the profit is not reinvested in a new habitual residence.
- In the event that the seller is over 65 years of age and the house sold is not his habitual residence, he will only obtain the exemption when the profit obtained is destined to the constitution of a life annuity with a bank or an insurer.
- When the house or apartment is delivered as a dation in payment to face a mortgage debt.
Municipal capital gain
The application of this tax is attributed to the municipalities. It is applied with respect to the increase in the value of the land in the years in which it has belonged to the person who is now selling the property.
As it is considered that it applies only to the ground, the constructions or reforms that have been made in it are not taken into consideration.
However, other factors are taken into account, such as the cadastral value and the number of years that the home has been owned, as well as, if it is more favorable to the owner, the difference between the acquisition and transmission values of the land. .
The total of this tax varies from one municipality to another. In general, documentation must be submitted within 30 business days of the signing of the deed.
Since November 2021, the way to calculate the increase in the value of land has been updated to adapt it to the reality of the real estate market.
Real estate tax
This tax is a municipal tax that must be paid every year when you own a house or an apartment.
Of the taxes when selling a house , this one presents a peculiarity.
This tax must be paid by the person who owns the home at the beginning of the current fiscal year, but, in the case of a sale, the total to be paid of this tax can be distributed between the seller and the buyer in proportion to the time that each one has owned the house during that year.
Other payments related to the sale of a home
It should be borne in mind that in addition to taxes when selling a house, other payments must be made:
Mortgage cancellation fees
It is very common that, when a house is sold, it is encumbered by an unpaid mortgage. In order to make the sale, the mortgage must be canceled.
In this case, the seller must pay the costs of said cancellation, which include, among others, the bank’s commissions for the cancellation, the notary’s minutes and the registration fees.
