When deciding to sell a house, it is essential to understand the associated taxes you will face as a seller. Although it may seem overwhelming, familiarizing yourself with these aspects will allow you to plan and calculate the net price you will obtain from the sale. In this article, we will explain the taxes you will have to pay when selling your house in Mallorca.
Capital Gain Tax
One of the most relevant taxes when selling a house is the Capital Gain Tax, which applies to the difference between the purchase value and the sale value of the property. This tax is governed by the Personal Income Tax (IRPF) and must be paid in the tax return for the year following the sale.
It is important to note that the capital gain is determined by subtracting the acquisition value of the property, including expenses and taxes associated with the purchase, from the sale value. Additionally, investments and improvements made to the property that have increased its value can be included in the calculation. However, commissions and interest paid on the mortgage cannot be deducted.
From 2023, the tax rates for capital gain are as follows:
- Gains up to 6,000 euros: 19%
- Gains between 6,000 and 50,000 euros: 21%
- Gains between 50,000 and 200,000 euros: 23%
- Gains between 200,000 and 300,000 euros: 27%
- Gains over 300,000 euros: 28%
The mentioned percentages apply progressively. For example, if your gain amounts to 52,000€, the first 6,000€ will be taxed at 19%, the next 44,000€ at 21%, and the last 2,000€ at 23%.
However, there are some tax exemptions that may apply in certain cases:
- If you reinvest the total amount of the capital gain in the acquisition or renovation of your main home. In this case, the exemption does not apply automatically and you must express your intention to take advantage of it. It is also necessary for the reinvestment to be made within the timeframes and conditions established by current legislation. (Tax Agency)
- If you are over 65 years old and sell your main home or reinvest in an annuity. (Tax Agency)
- For people in a severe or high dependency situation.
- If the property must be handed over in lieu of payment.
- No gain is obtained from the sale of the property.
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Municipal Capital Gains Tax
Another relevant tax when selling a house is the Tax on the Increase in Value of Urban Land. There are two approaches to calculate the sale tax:
- The real one, based on the difference between the purchase and sale costs.
- The objective one, which considers the cadastral value of purchase and sale updated. In this case, if the taxpayer can demonstrate that the real method is more beneficial, they can opt for it.
It is important to note that the payment of the municipal capital gains tax corresponds to the seller and must be made within 30 working days after the sale.
Property Tax (IBI)
The Property Tax (IBI) is an annual tax paid for owning real estate, such as a house, a commercial space, or a garage. The seller of the property will pay this tax. However, according to a ruling by the Constitutional Court, it is possible to pass on a proportional part of the IBI to the buyer for the time each party will own the property during that year.
It is important to keep in mind that being up to date with IBI payments for the last four years is essential to carry out a sale without surprises.
Conclusion
Selling a house involves compliance with certain taxes that must be taken into account to avoid legal and financial complications. The Capital Gain Tax, the Municipal Capital Gains Tax, and the Property Tax are the main taxes to consider when selling a property.
It is important to get advice from experts in the field of taxes and the real estate sector to ensure a successful and smooth sale process. For this reason, at Real Estate Balear, we are here to help you at every stage of selling your property, providing the knowledge and experience necessary to maximize your profits and meet your obligations. Do not hesitate to contact us for personalized and transparent advice.
*Note: This article is only an informational guide and should not be considered as tax or legal advice. It is recommended to consult a qualified professional for specific advice on your situation.
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