Capital Gains Tax When Selling Property in Spain: A Complete Guide for Foreign Owners

Selling a property in Spain triggers a capital gains tax liability that can come as a significant surprise to foreign owners who have not planned ahead. Whether you are a UK resident offloading a holiday apartment in Palma, a German couple selling their villa in Calvia, or an Irish investor disposing of a rental property in Soller, the Spanish tax authorities will want their share of your profit.

This guide covers everything you need to know about capital gains tax (CGT) on property sales in Spain, including the differences between resident and non-resident rates, the 3% buyer retention, available exemptions, the municipal plusvalia tax, and how the UK-Spain double taxation treaty affects your final liability. All figures are current for the 2025-2026 tax year.

How Capital Gains Tax Works in Spain

In Spain, capital gains tax on property is levied on the profit you make when you sell -- that is, the difference between what you paid for the property (adjusted for certain costs) and what you sell it for (minus certain selling expenses). The tax applies to both Spanish tax residents and non-residents, but the rates and mechanisms differ considerably.

The gain is not calculated simply as "sale price minus purchase price." Spanish tax law allows you to adjust both the acquisition value and the transfer value to arrive at the taxable gain. Understanding these adjustments is essential to minimising your liability legally.

Calculating the Taxable Gain

The formula is straightforward in principle, though the details require careful attention:

Taxable Gain = Transfer Value - Acquisition Value

Acquisition Value (What You Paid)

The acquisition value is not simply the purchase price. You may add the following costs to increase the base, which reduces your taxable gain:

• Purchase price: The amount stated in the escritura (title deed)
• Transfer tax (ITP) or VAT paid on purchase: Typically 8-10% for resales in the Balearic Islands, or 10% VAT plus 1.5% stamp duty for new builds
• Notary and Land Registry fees from the original purchase
• Legal fees paid at the time of purchase
• Documented improvements: Major works such as extensions, new kitchens, pool installations, or structural renovations -- provided you have facturas (invoices) to prove them. Routine maintenance and repairs do not count.

Keep your invoices. The single most common mistake foreign sellers make is failing to retain receipts for improvements carried out over the years. Without invoices, you cannot deduct these costs from the gain, which can increase your tax liability by thousands of euros.

Transfer Value (What You Receive)

The transfer value is the sale price, from which you may deduct:

• Estate agent commission (typically 3-5% plus VAT)
• Plusvalia municipal tax (see below)
• Legal fees incurred in the sale
• Energy certificate costs
• Mortgage cancellation fees (if applicable)

Worked Example

Consider a British couple who bought an apartment in Andratx in 2016 for 350,000 euros. They paid 28,000 euros in transfer tax, 3,000 euros in notary and registry fees, and 2,000 euros in legal fees. They subsequently invested 40,000 euros in a documented renovation (new kitchen, bathrooms, and terrace). Their total acquisition value is therefore:

350,000 + 28,000 + 3,000 + 2,000 + 40,000 = 423,000 euros

They sell the property in 2026 for 520,000 euros. The estate agent's commission is 26,000 euros (5%), legal fees are 1,500 euros, and the plusvalia tax comes to 2,800 euros. Their transfer value is:

520,000 - 26,000 - 1,500 - 2,800 = 489,700 euros

The taxable capital gain is 489,700 - 423,000 = 66,700 euros.

Capital Gains Tax Rates for Residents

If you are a Spanish tax resident (living in Spain for more than 183 days per year, or having your centre of economic interests in Spain), capital gains from property sales are taxed as part of your savings income (renta del ahorro) at progressive rates:

Taxable Gain (euros)	Rate
First 6,000	19%
6,001 - 50,000	21%
50,001 - 200,000	23%
200,001 - 300,000	27%
Over 300,000	28%

Using our example above, a Spanish resident with a 66,700-euro gain would pay: (6,000 x 19%) + (44,000 x 21%) + (16,700 x 23%) = 1,140 + 9,240 + 3,841 = 14,221 euros.

Capital Gains Tax Rates for Non-Residents

If you are a non-resident, the capital gains tax rate on property sales in Spain is a flat 19%, regardless of whether you are an EU citizen, a UK national, or from elsewhere. This is one area where Brexit did not change the rules -- all non-residents pay the same rate.

Using the same example, a non-resident would pay 66,700 x 19% = 12,673 euros.

Interestingly, for gains below approximately 60,000 euros, the non-resident flat rate of 19% actually produces a lower tax bill than the resident progressive scale. For very large gains exceeding 200,000 euros, the resident rates climb higher. However, residents have access to exemptions (discussed below) that non-residents generally cannot use.

The 3% Retention: How It Works

This is the mechanism that most frequently catches foreign sellers off guard. When a non-resident sells property in Spain, the buyer is legally obliged to withhold 3% of the total sale price and pay it directly to the Agencia Tributaria (Spanish tax authorities) within one month of the sale.

This is not an additional tax. It is an advance payment against your capital gains tax liability, designed to prevent non-residents from selling and leaving Spain without paying their taxes.

What Happens After the Retention

After the sale, you must file Modelo 210 within three months to declare your actual capital gains tax liability. Three scenarios are possible:

• Retention exceeds your liability: You claim a refund for the difference. In practice, refunds typically take 6-12 months to process, sometimes longer.
• Retention matches your liability: Nothing further to pay.
• Retention is less than your liability: You must pay the difference within the three-month filing window.

Example: When the 3% Exceeds Your Tax

Suppose you sell a property for 400,000 euros. The 3% retention is 12,000 euros. Your actual capital gain (after all deductions) is 30,000 euros, giving a tax liability of 30,000 x 19% = 5,700 euros. You are entitled to a refund of 12,000 - 5,700 = 6,300 euros.

Example: When You Sell at a Loss

If you sell at a loss (your adjusted acquisition value exceeds your transfer value), your capital gains tax liability is zero. But the buyer must still withhold the 3%. You can reclaim the entire 12,000 euros (or whatever the retention amount is) by filing Modelo 210 and demonstrating the loss. Keep all documentation meticulously, as the tax authorities will scrutinise loss claims carefully.

Important: The 3% retention applies to the total sale price, not to the gain. On expensive properties, the retention can be substantial. On a 1,000,000-euro sale, the buyer withholds 30,000 euros. If your actual gain is modest relative to the sale price, you may have a significant amount of capital tied up pending the refund.

Exemptions and Reductions

Spanish tax law provides several exemptions from capital gains tax, though most are available only to tax residents. Understanding these is critical if you are considering changing your residency status before selling.

Over 65 Exemption (Residents Only)

If you are a Spanish tax resident aged 65 or over and selling your habitual residence (the property where you have lived for at least the last three years), the entire capital gain is exempt from tax. This is one of the most valuable tax exemptions in Spanish property law.

For residents over 65 selling a property that is not their habitual residence, the gain is exempt if the proceeds are reinvested in a life annuity (renta vitalicia) within six months, up to a maximum of 240,000 euros.

Reinvestment in Habitual Residence (Residents Only)

If you are a Spanish tax resident of any age and sell your habitual residence to purchase another habitual residence in Spain (or the EU/EEA), the gain on the portion of the proceeds reinvested is exempt. You must reinvest within two years before or after the sale.

Example: You sell your home for 500,000 euros (with a gain of 100,000 euros) and buy a new home for 450,000 euros. Since you reinvested 90% of the proceeds (450,000/500,000), 90% of the gain is exempt. You pay CGT on only 10,000 euros.

Non-Residents: Very Limited Exemptions

Non-residents do not benefit from the over-65 exemption or the reinvestment exemption. However, properties purchased before 31 December 1994 may benefit from a transitional reduction coefficient (coeficientes de abatimiento) that reduces the taxable gain. This applies only to the portion of the gain attributable to the period before 20 January 2006, and only if the total transfer value of all assets sold since 2015 does not exceed 400,000 euros. These rules are complex and require specialist advice.

Municipal Plusvalia Tax

In addition to national capital gains tax, sellers must pay the plusvalia municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana), a local tax on the increase in land value during the period of ownership.

Two Calculation Methods

Since a landmark 2021 Constitutional Court ruling, municipalities must offer two methods, and the taxpayer may choose whichever produces a lower amount:

• Objective method: The cadastral land value is multiplied by coefficients set by the municipality based on years of ownership. These coefficients were updated in 2021 and tend to produce lower results than the old formula.
• Real method: Based on the actual gain on the transaction, with the land portion calculated from the cadastral breakdown (the ratio of land value to total cadastral value applied to the actual gain).

No Gain, No Tax

If you sell at a loss -- that is, your sale price is lower than your purchase price -- you are not liable for plusvalia. You must demonstrate the loss by presenting the original and current title deeds to the ayuntamiento.

Typical Amounts

Plusvalia varies enormously depending on the municipality, the cadastral land value, and the years of ownership. For a typical apartment in Palma owned for 10 years, expect to pay between 1,000 and 5,000 euros. For a large villa in Calvia or Andratx, the amount can be considerably higher.

Plusvalia must be paid within 30 working days of the sale. Late payment incurs surcharges.

The UK-Spain Double Taxation Treaty

The UK-Spain Double Taxation Agreement (DTA) is a bilateral treaty that prevents British property owners from being taxed twice on the same gain. It was not affected by Brexit and remains fully in force.

How It Works for Capital Gains

Under the DTA, capital gains from the sale of immovable property (real estate) may be taxed in the country where the property is situated -- in this case, Spain. However, the UK also has the right to tax UK residents on their worldwide income, including Spanish property gains.

To prevent double taxation, the UK grants a foreign tax credit for the Spanish CGT paid. You report the gain on your UK Self Assessment tax return, calculate the UK tax due, and then offset the Spanish tax already paid.

Practical Example

A UK resident sells a property in Mallorca with a gain of 66,700 euros (approximately 57,000 pounds). In Spain, they pay 19% CGT = 12,673 euros. In the UK, the same gain is subject to CGT at either 18% (basic rate) or 24% (higher rate) after the annual exempt amount (currently 3,000 pounds).

If the UK rate is 24%, the UK liability on 54,000 pounds (after the annual exemption) would be approximately 12,960 pounds (roughly 15,100 euros). The Spanish tax of 12,673 euros is credited against this, leaving approximately 2,400 euros additional to pay in the UK.

If the UK rate is 18%, the UK liability (approximately 9,720 pounds or 11,350 euros) would be less than the Spanish tax paid, meaning no additional UK tax is due. The excess Spanish tax is not refundable by HMRC -- it is simply lost.

Important: The annual exempt amount, tax rates, and exchange rate all affect the final calculation. Work with an accountant who understands both UK and Spanish tax to optimise the outcome. Timing the sale to fall within a particular UK tax year can also make a meaningful difference.

Reporting Requirements and Deadlines

In Spain

• Modelo 210: Must be filed within 3 months of the sale to declare the capital gain and reconcile the 3% retention. If you owe additional tax, it must be paid with this filing.
• Plusvalia: Declared and paid at the local ayuntamiento within 30 working days of the sale.

In the UK

• Self Assessment tax return: Report the gain in the Capital Gains section of your tax return for the year in which the sale completed. Claim foreign tax credit relief for Spanish CGT paid.
• 60-day reporting rule: Since April 2020, UK residents must report and pay CGT on UK residential property disposals within 60 days. This rule applies to UK property only -- it does not apply to overseas property sales. However, you should still include the gain in your annual Self Assessment return.

Common Mistakes to Avoid

• Not retaining improvement invoices: Without facturas, you cannot deduct the cost of renovations from your gain
• Forgetting the 3% retention refund: If the retention exceeds your tax liability, you must actively file Modelo 210 to reclaim the excess. It is not automatic.
• Ignoring plusvalia: This is a separate tax from CGT, payable to the local council. Missing the 30-day deadline triggers surcharges.
• Failing to report in the UK: Even if your Spanish tax covers the full UK liability, you must still declare the gain on your UK tax return. HMRC and the Agencia Tributaria exchange information automatically under the Common Reporting Standard.
• Not considering residency planning: If you are close to the 183-day threshold for Spanish residency, the over-65 exemption or reinvestment exemption could save you tens of thousands of euros. Consult a tax adviser before selling.

Plan Ahead for a Tax-Efficient Sale

Capital gains tax on a Spanish property sale is unavoidable, but the amount you pay is very much within your control. By maintaining proper records, understanding the available deductions, and working with qualified advisers in both Spain and the UK, you can ensure that your tax liability is minimised legally and that there are no unpleasant surprises at completion.

The first step in planning any sale is understanding what your property is worth in today's market. With accurate valuation data, you can model different sale scenarios, estimate your likely gain, and plan your tax position accordingly.