SELLER’S GUIDE

We can summarize the main steps as follows, but we will delve deeper into the details of each one later so that you can understand all aspects of the process.

1. CHOOSE A REAL ESTATE AGENCY
2. CONDUCT VISITS
3. RECEIVE AN OFFER
4. PRIVATE CONTRACT / ARRAS
5. DEED

...LET’S DIG DEEPER

Choosing a reliable real estate agency in Costa del Sol is crucial for ensuring an efficient and successful selling process. A competent agency will provide knowledge of the local market, effective marketing strategies, and a wide network of potential buyers. Moreover, it will guide you through the legal and administrative complexities, helping to set an appropriate selling price, prepare necessary documentation, and negotiate offers to maximize your profits.

When selling your property in Costa del Sol, you can opt for local real estate agencies specialized in the region’s market, offering a wide network of possible buyers, or self-management with the support of digital tools. The choice depends on the seller’s personal preferences, the type of property being sold, and the level of support and visibility desired for the property, but certainly, having the assistance of an experienced real estate agent is the most efficient and least stressful way to sell a property.

Costa del Sol offers many options in this regard, as it is home to more than 3,000 registered agencies. When choosing the real estate agency you want to collaborate with, consider those with proven experience in their area, evaluate their online presence, make sure they have a deep understanding of the local market, communicate clearly, and offer good support throughout the selling process.

Our agency, UNIKK HOME, with an operational office established in Estepona, features a highly trained sales team and solid professional marketing support. With a proven track record, we stand out for providing detailed information and exhaustive reports on property visits. All our properties are published across multiple portals as well as in various MLS databases in Costa del Sol and are shared with all local agents, ensuring a broad local exposure for our listings.

We understand that selling a property involves various factors and that it’s hard to predict the speed or ease with which a sale will close. However, we commit to doing everything possible to ensure a fair valuation of your property, a successful marketing strategy that reaches a wide audience through various media, and that your property is impeccably presented during visits to highlight all its features.

Working with a SINGLE AGENCY or with MULTIPLE AGENCIES?

You can choose between working with a single real estate agency under an Exclusive Agreement or with multiple agencies at the same time, which would be a Non-Exclusive Agreement. Both options have their pros and cons, depending on your needs, circumstances, and expectations for the sale of your property.

By signing an Exclusive Sales Mandate, you commit to having a single real estate agency handle the sale of your property for an agreed period. This means that even if you find a buyer on your own or through another agency, the exclusive agency would still be entitled to its commission. In return, the agency commits to dedicating specific resources and efforts to promote and sell your property, potentially offering a more personalized service and a more intensive marketing strategy.

There’s also the possibility of agreeing and signing a Single Agency Sales Mandate, which is a type of agreement where you choose one agency to sell your property, but unlike the exclusive one, it allows you to sell the property on your own to a buyer you’ve contacted directly (without the intermediation of other agencies) without paying a commission to the agency. This model seeks to combine the advantages of having a dedicated single agency while maintaining the possibility of the owner making the sale directly.

An Exclusive or Single Agency Sales Mandate is ideal if you prefer to simplify the selling process by having a single point of contact and if you value an agency deeply involved in achieving the best possible outcome for your property. The chosen agency will be solely responsible for conducting visits, maintaining and checking the client registry, and handling negotiations among all potential parties. With this type of agreement, the seller can relax and wait for the agency to do its work without headaches.

However, signing an Exclusivity or Single Agency agreement will not affect the visibility of your property. On the contrary, thanks to the Collaborative Sales Model applied in Costa del Sol, the chosen agency will be able to collaborate more confidently with other agencies to find a buyer, sharing the commission if the sale is made through a collaborating agency. This collaboration is carried out under specific agreements between agencies to expand the reach of potential buyers, keeping the single agency as your main point of contact. A real estate agency under an exclusivity agreement can increase your property’s visibility through its network of contacts and collaborations with other agencies, in addition to using well-developed marketing strategies. This agreement can ensure a concentrated and coordinated effort in promoting your property, making the most of the agency’s resources.

On the other hand, the Non-Exclusive Sales Mandate offers more freedom to the sellers, allowing them to work with multiple agencies simultaneously but possibly reducing commitment, personalized attention, and coordination in the sale. Working with multiple agencies can increase the visibility of your property, but it might result in less coordination among agencies or inconsistent property presentation. Also, it may lead to less marketing effort from each agency, as none is guaranteed the commission. With this type of agreement, the seller, in addition to managing the client registries of all agencies, will have to establish direct agreements with each agent to avoid misunderstandings or disputes related to the property’s price and fees. Managing all these aspects and multiple relationships can be more complex and costly in terms of time and effort for the seller.

With commission parity among the three types of agreements, since the general real estate agency commission established in Costa del Sol is 5%+VAT of the final sale price, the choice of one agreement over another depends on the seller’s needs and expectations for the sale of their property.

The Commission

When signing a Sales Mandate, or establishing a verbal agreement, one of the most crucial points is the commission.

The sales commission for real estate agencies in Costa del Sol typically ranges between 5% and 6% plus VAT of the final sale price of the property. This rate may be negotiable depending on the agency and the specific circumstances of the sale. It’s important to discuss and clearly understand the terms of the commission before signing an agreement with a real estate agency.

The commission is generally paid upon the conclusion of the sale, usually as part of the closing procedures, or at the notary when signing the Deed. This payment is deducted from the final sale price of the property and is paid to the real estate agency according to the terms agreed upon in the real estate brokerage contract, or sales mandate. The agency will provide the seller with the corresponding invoice.

The Price

Another important aspect established at the time of agreeing on a real estate mediation is setting the sale price.

The real estate agent is best suited to set a fair price, and will do so based on market conditions, location, the state and features of your property, and comparable sales in the area.

Getting the listing price right is crucial for a successful sale. The key to selling a house lies in conducting visits; without visits, it’s unlikely to sell in a reasonable timeframe.

Setting a price too high for a property can result in a lack of demand, causing the property to stagnate on the market, and necessitating successive price reductions. A house that has been on sale for a long time or that has undergone many price changes can lose its appeal and create doubts among potential buyers. This is referred to as “burning” the property. To avoid this, it’s crucial to price it right from the start, balancing what you hope to earn and what buyers are willing to pay.

Setting a price below market value is not in the interest of the owner, but neither is it in the interest of the real estate agent, as their profit is directly proportional to the sale price. However, pricing too high can position your property out of the market, with the risk of not generating interest, not attracting visits, and consequently not finding buyers. The challenge lies in finding the balance between setting an attractive price and avoiding overvaluing the property, which could deter potential buyers.

The price is not dictated by the agent or the owner, but is determined by the market, by what the buyer is willing to pay.

It’s uncommon to achieve the initial asking price unless the property is exceptional. Therefore, it’s advisable to leave room for negotiations by establishing reference prices.

If you’ve chosen an agent who has a deep understanding of the market and possesses the necessary tools to accurately value your property, trusting and being guided by their experience and knowledge in this process will ensure an optimal sale in terms of price and time. Work with your real estate agent to set a competitive and attractive price for the property, based on the current market and the specific characteristics of the real estate. A suitable price can attract more buyers and increase the chances of a quick and successful sale.

Preparing a property for sale involves a series of important steps that can enhance its appeal and value in the market.

PREVIOUS DOCUMENTATION

There are several important documents that the real estate agent will request and that you need to prepare before listing your property for sale.

Some of the common documents you will need include:

• Your Identification Document (DNI, NIE, or Passport): Essential for verifying your identity as the property seller.
• Nota Simple or Property Deed: This document, beyond detailing square footage and other property aspects, proves you are the legal owner and thus eligible to sell. The Nota Simple also provides additional information on any outstanding charges or legal issues.
• Copy of Property Tax (IBI) and Garbage Tax: The IBI and Garbage Tax are annual property taxes paid to the city council. Providing a copy of these receipts, or at least their amount, helps buyers understand the costs associated with the property.
• Community of Owners: If your property is part of an apartment building or a community with common areas, you need to provide information about the community of owners’ costs, as this is another expense every client wants to know before deciding to purchase your home.
• First Occupation License (LPO): This official document, issued by the city council or local authority, certifies that a property has been built in accordance with applicable building permits and urban regulations, and meets the requirements to be inhabited for the first time. This license is necessary for legally inhabiting a dwelling and is required for connecting to basic services like water, electricity, and gas. If you do not have a copy of this document, at this stage, it is sufficient to call the City Hall to get the file number of the LPO License.
• Property Plans: Another document often requested by buyers are the property plans showing the layout and distribution, including details such as the number of rooms, bathrooms, and other important features. While not strictly necessary, and not all owners in Spain have them, it’s good to request them from the City Hall as they can be useful for interested buyers.
• Energy Efficiency Certificate: This certificate shows the energy efficiency of the property and costs approximately €100. Although it is not essential when listing the property for sale, it will be mandatory to formalize the sale, and it is also necessary for the agency to advertise your property in their physical showcase. Being valid for 10 years, managing it from the beginning of your property’s marketing is an effective way to anticipate events and ensure everything is ready for sale.
• Any documents related to improvements or renovations: If you have made improvements or renovations to the property, such as building an extension or renovating the kitchen, it’s important to have documentation supporting these improvements. This can include construction permits, contractor invoices, and product warranties.

According to Decree 218/05 of the Spanish regulations, the real estate agent must have a copy of these documents. They are essential not only for the agent to have complete and accurate information about your property to market it properly, but they are also indispensable for completing the transaction legally and smoothly.

It’s important to gather all these documents in advance and ensure they are in order to facilitate the sales process and avoid delays or legal issues. Moreover, your real estate agent can help determine which specific documents are needed in your particular situation.

It’s wise to be fully prepared and notify your lawyers when you list your property for sale. Ask them to prepare all the necessary documentation and ensure that due diligence is carried out smoothly. Additionally, it’s advisable to seek advice on your tax situation, especially if you have owned the property for a long period, as there could be significant differences in the sale price. Transactions can fail if issues are not addressed from the beginning or if the documentation is not in order.

MARKETING YOUR PROPERTY

Marketing a property involves various strategies to attract potential buyers, and in the digital age, professional marketing is crucial for selling properties. Essential marketing materials include high-quality photographs, drone-captured videos, virtual tours, or even a dedicated website for the property. Creating printed materials, listing the property on multiple real estate sales platforms, and conducting digital marketing and social media campaigns are also essential steps in selling your property. Organizing open house events for interested parties and other agencies to visit and learn about the property is common as well. These tools not only increase visibility but also highlight the unique features of the property, effectively capturing the interest of potential buyers.

• Digital Material: Simply posting a few photos online is no longer enough; visual quality is key. We ensure your property stands out with high-resolution professional photography, complemented by creative videos and 360º virtual tours. These modern tools are essential for capturing the attention of global buyers, allowing them to explore your property in detail, no matter where they are.
• Online Listing: For a real estate agency, a professional and well-managed website is crucial, acting as the core of its digital marketing activities. It must be regularly updated, SEO-optimized, and designed to be intuitive and information-rich. UNIKK HOME’s website www.unikkhome.com excels in this. Available in multiple languages, we offer an extensive database of properties with detailed descriptions, high-quality images, and videos, including 360-degree virtual tours. Team profiles facilitate connections with agents, and mobile device adaptation ensures a seamless and accessible user experience. Additionally, we enhance our website content with area guides and blog and vlog articles of general interest related to the real estate sector and all its updates. Our collaboration extends beyond our own platform, working hand in hand with more than 10 national and international portals, thus ensuring maximum visibility and exposure for your property.
• Collaboration with Other Agencies: To maximize your property’s visibility, we work closely with over 1,000 local agents and promote it through MLS databases.
• “For Sale” Sign: Placing a “For Sale” sign can be an effective strategy to attract buyers who are personally exploring areas of interest. However, this tool can be a double-edged sword. Often, the presence of a sign encourages interested parties and curious onlookers to show up and knock on the door, so if you do not wish for “uninvited guests,” it’s better not to place such a sign. Nevertheless, this remains a particularly useful tactic for vacant properties.

We pride ourselves on our renowned track record as a real estate agency in Costa del Sol, and our comprehensive service for sellers, backed by an expert, efficient, and friendly sales team, guarantees results aligned with your expectations.

VIEWINGS

There are no second chances to make a first impression.

The first impression is crucial in selling a house, as it can significantly influence the perception and interest of potential buyers.

Therefore, it’s essential to present the property in an impeccable manner, clearing clutter and ensuring it’s clean and tidy. In a competitive market like Costa del Sol, where buyers prefer move-in-ready homes, it’s crucial to offer a property in optimal condition because homes presented in an impeccable state sell quickly.

Keeping the house clean, fresh, and free of clutter, as well as addressing any maintenance tasks beforehand, will go a long way in making a positive impression on potential buyers. Likewise, it’s important that the property be easily accessible and well-presented, with special attention to outdoor areas, which are highly valued by buyers in this region.

We also recommend that homeowners not be present during visits, as this not only allows real estate agents to better highlight the unique features of the property, but also makes potential buyers feel more comfortable expressing their opinions.

Additionally, if you have pets, it’s advisable to keep dogs, especially large ones, out of the way during visits by potential buyers, because although most people don’t mind domestic animals, they could distract from the main goal: viewing the house without interruptions.

Client Registration

In Spain and on the Costa del Sol, buyers, in their search for a property to purchase, may simultaneously contact several real estate agencies for one or more properties. Therefore, agencies offer their buyers the properties they are looking for, but also additional options that the agencies themselves share among each other and that match the buyer’s search criteria. This collaborative sales model can sometimes result in several agencies offering the same property to a client.

To bring clarity to the network of properties, agencies, and buyers, agencies, especially on the Costa del Sol, adhere to the ethical paralegal concept of the Client Registry during visits.

The Client Registry involves communicating to the owner before the scheduled visit the name and surname, as well as the nationality of the client who will visit the property at the agreed date and time. The owner at this point has to review the list of other clients who have previously visited the property through other agencies or directly through the owner themselves and ensure that the client currently attempting to register by the current agency for the scheduled visit has not already visited this property by any other means. If the client has already visited this property, they are considered already registered, and therefore the current registration does not proceed.

For example:

Juan Garcia is a buyer looking to purchase a property in Estepona. In his property search, he contacts agency A and agency B. Both agencies have the property on Calle España listed for sale at €500,000, and both propose the property to their client, who, not realizing it’s the same property, asks both agencies to visit the property. Agency A contacts the owner first, arranges a visit for the next day, and communicates Juan Garcia’s name for the client registry. The visit takes place, and shortly after, agency B contacts the owner to arrange a visit. In this case, when agency B communicates Juan Garcia’s name, the owner cannot accept this client registration since the visit through agency A has already registered this client with agency A.

In summary, the agency that first registers the client and conducts a visit to a certain property is the agency through which the client will purchase the property if they ultimately decide to do so.

This practice was created to prevent disputes by avoiding different agencies taking the same client to a property that the client has previously visited with another agent, and we are all committed to ensuring that the client registration is respected by all involved parties: agents, owners, and buyers.

However, a buyer may take more time to decide on one property or another, so the client registration is not eternal but is usually considered valid for a period of approximately 6 months. After 6 months, without the client making an offer for the property through the initial agency, their registration expires, and another agency can register the same buyer, show them the house, and process the sale if applicable.

If you, as a selling owner, have decided to collaborate with several agencies for the sale of your property, you will have to personally control and manage the client registrations sent by the agencies with which you market your home. If, on the other hand, you have agreed to an exclusivity agreement (Exclusive Sales Mandate or Single Agency Sales Mandate) for the sale of your property, this entire process will be carried out through a single agency, which will handle all client registrations and ensure that there are no conflicts.

THE OFFER AND RESERVATION

The duration of the viewing period can vary based on several factors, but generally, a second or third visit indicates serious interest on the part of a buyer that could culminate in an offer. An experienced agent will guide you through this process and request a detailed written offer with all relevant conditions.

The offer is a very important moment and must be managed with due diligence not only in reference to the price but also in other terms such as reservation periods, down payments, and deed signing, inclusion of annexes, furniture, and other aspects of the property.

An offer with a reservation deposit simply serves to take the property off the market.

It’s possible to process an offer remotely since both the offer and the reservation deposit serve to show the buyer’s commitment and interest to the owner, and to prevent the property from being acquired by someone else during negotiations.

The offer will specify all aspects of the operation, and it can be subject to any condition required by the buyer, such as successful due diligence or obtaining a mortgage. For example, if the buyer specifies that their offer is subject to document verification and a problem arises during due diligence, the buyer can withdraw their offer and recover their deposit. On the other hand, if the offer indicates that it is subject to mortgage approval and the buyer ultimately does not obtain the mortgage, the transaction can again be canceled, and the buyer can get their deposit refunded.

As a seller, you can reject an offer or present your own conditions for the operation, thus entering a negotiation process for the successful sale of the property. If there are other interested buyers or other offers on the table, the seller can choose the offer that presents the most beneficial conditions for them.

The amount of the reservation deposit, which will be deducted from the total price agreed upon by the parties, can be 1% of the property’s value, €5,000, or even higher if the parties agree to different conditions. Generally, the deposit is paid into the agency’s account or into the account of the buyer’s or seller’s lawyer, and it is held in escrow for the parties of the operation until the completion of the purchase and sale through the signing of the notarial deed.

An offer should include at least these elements:

• Price: The amount the buyer is willing to pay for the property.
• Payment Method: How the buyer intends to finance the purchase (cash, mortgage, etc.).
• Amount of Deposit: The deposit amount and under what circumstances it will be refunded.
• Special Conditions: Such as mortgage approval, home inspection, or any other condition that must be met for the sale to proceed.
• Inclusion of Furniture: If the sale includes furniture (the agent will compile a list of the furniture and its value), or any annex to the property (parking space or storage room).

The real estate agent acts as a mediator during negotiations, working to achieve the most favorable outcome for you. An experienced agent will aim to ensure that you get the best possible deal. It’s crucial to follow a formal process and avoid verbal offers that lack clarity in terms.

Once the buyer and seller have agreed on all conditions, formed the Offer and Reservation Agreement, the buyer typically has a 48-hour period (or more, if agreed upon by the parties) to make the deposit and present the payment proof. Once the deposit is made, the property is taken off the market, and we can focus on the subsequent steps to conclude the transaction.

DUE DILIGENCE – DOCUMENT VERIFICATION

After successfully concluding the offer and reservation phase, where the seller and buyer have established and accepted the respective terms, and the deposit has been paid, it’s time to prepare and ensure the fulfillment of the stipulated conditions. This process is generally carried out by the legal representatives of both parties. Your real estate agent will facilitate the introduction between all parties involved, inform the lawyers about who represents whom, share relevant contact information, and encourage them to communicate with each other to coordinate the property sale. In the absence of lawyers, the document due diligence process will be carried out by the real estate agent, who will act as an intermediary, accompanying the parties and providing them with the necessary documentation for review.

An implicit condition of any real estate purchase is to ensure that the property is free of encumbrances and occupants. In this sense, it’s important to verify if the property is mortgaged or has any outstanding taxes, such as municipal taxes (IBI, Garbage) or community expenses. If such outstanding charges are found, they must be resolved before the transaction is concluded.

If there are debts associated with the property, the seller must provide proof of payment, or another option is to deduct the amount of outstanding bills from the purchase price, leaving the buyer to make the payments. Therefore, even if the property is mortgaged or has debts, it’s not a problem as long as this situation is communicated in advance, since all outstanding balances with banks or other creditors will be settled at the notary.

The commonly required documentation to be prepared at this stage includes:

• Nota Simple.
• Electronic cadastral certification or cadastral reference.
• Latest IBI and Garbage receipts, and confirmation of being up to date with payments or indication of debt for withholding from the sale price, if applicable.
• Certificate from the Community of Owners confirming the payment of fees and special assessments (at this stage, a simple confirmation is sufficient, as the final Certificate will be issued days before the deed signing).
• Energy Efficiency Certificate and its registration with the Junta de Andalucía.
• First Occupation License.
• Last electricity bill.
• Last water bill.
• Last gas bill.
• Inventory (in case the property is sold with furniture).
• Outstanding mortgage amount (if applicable).

Property appraisal

The home buyer can carry out a property inspection through an official appraisal company. This will provide a reliable picture of the condition of the dwelling, the construction level, and the sale price. This inspection will be the responsibility of the buyer, who will pay the inspection company a fee based on the value of the dwelling. The appraisal company will compile information about the dwelling into a special book, which will remain in possession of the buyer.

In the case of the buyer applying for a mortgage, the bank will carry out an additional appraisal. The bank’s appraisal is performed by an independent company appointed by the bank. The cost of the appraisal is paid by the buyer, and its amount ranges from €300 to €2,000, depending on the size of the property. The valuation takes into account the condition of the property, its area, the neighborhood, and the price. The bank loan will be proportional to the valuation of the dwelling. Often, the price estimate is slightly lower than the market price.

Once due diligence is complete, and all the offer’s conditions are met, it’s time to secure the transaction and sign the Private Purchase Agreement (“Arras”).

In common Spanish practice, a Private Contract (Private Purchase Agreement or Arras) is signed about 1 month after the reservation deposit, but this period can vary depending on the complexity of the transaction and due diligence, from a minimum of 2 weeks to a maximum of 2 months after the reservation. The next step after the PPC will be the signing of the final public deed of sale (Escritura).

The Private Contract reiterates all the terms and conditions of the sale and is legally binding, entailing an additional down payment of 10% to 30% of the purchase price agreed upon by the parties. This down payment typically ranges from 10% to 30% of the property value and agreement between the parties, and this time it is paid into the seller’s account.

After the signing of the Private Contract, both parties are bound, and it’s very difficult for the buyer to withdraw from the transaction and receive a refund of the amount paid. Similarly, it’s a challenge for the seller, as if they decided to withdraw from the sale, they would have to pay a penalty and refund the buyer double the amounts received.

The Private Purchase Agreement can be signed by the buyer in person or remotely, or by their Spanish lawyer with a notarial power of attorney document.

After the private contract has been signed, the buyer and seller sign the Public Purchase Deed at the notary’s office. Both the buyer and seller must be present in person or represented by a lawyer through a Power of Attorney.

Receipts for the previous year’s property tax (IBI) and proof of paid fees must also be brought.

The public purchase deed is reviewed by a notary, and all the terms of the sale are recorded in it. The notary’s responsibilities include certifying the formal authenticity of the deeds and acting as a witness when the deed is signed. The notary must also ensure that the sale parties understand the document’s content. In Spain, deeds are drafted on paper, and each page of the deed must be signed on both sides by the buyer, seller, and notary. The notary keeps the original document and provides copies of the deed to both the seller and the buyer. The notary confirms the legality of the sale with a signature. It’s possible to request the text of the Deed in advance of signing, and you should take the time to read it. As soon as you have signed the deeds, you should be provided with a copy of the new Deed. Normally, you can obtain it while you wait.

The notary’s fee is calculated as a percentage of the purchase price and is generally paid by the buyer, as well as other transfer costs, which we will describe later.

The documents are then submitted to the property registry for title registration. The registration of the titles in the Property Registry is carried out within a maximum of 30 days after the sale, and its fee is paid by the buyer. A registered and stamped copy of the original deed from the property registry can usually be obtained within a few months from the date of signing the Deed.

If there is already an outstanding loan on the property you are selling, its cancellation will only be done through a notary at the time of concluding the sale. Representatives of the banks will be present at the signing of the deed, with whom a solution must have been negotiated beforehand.

Some regular taxes may arise for property owners, especially for non-residents, when selling their second homes in Spain. Real estate owned by non-residents and classified as second homes are subject to different taxation compared to residential properties occupied by their owners. In these cases, the buyer will be responsible for withholding taxes on behalf of the seller, paying them, and providing the seller with a receipt.

PLUSVALÍA – Municipal Value Gains Tax

One of the concerns for sellers is the Value Gains Tax or Tax on the Increase in Value of Urban Land (IIVTNU). In Spain we all call it PLUSVALÍA. This is a tax on the capital gain generated when you sell a property for a price higher than what you bought it for, based on the idea of taxing the increase in value of a property, which may have been influenced by external factors like infrastructure development or improvements in the neighborhood, in addition to direct investment in the property. The Plusvalía Tax is the mandatory tax that must be paid when selling, inheriting, or accepting a donation and obtaining a profit in return.

There are two methods to calculate the Plusvalía Tax, the objective and the real. The new regulation allows choosing the one that results in a lower tax.

Objective Mechanism:

• It starts with the cadastral value.
• This value is multiplied by the applicable coefficient according to the years of ownership.
• The result is multiplied by the local % rate to obtain the tax to be paid.

Real Mechanism:

• The difference between the sale and purchase price is calculated.
• This result is multiplied by the percentage of the cadastral value of the property.
• The amount obtained is applied to the local % rate to calculate the real capital gains.

The mechanism that is most advantageous is the one that results in a lower tax payment. The payment is made by self-assessment, choosing the calculation system that benefits the most. The self-assessment form can be obtained at the notary’s office, in person at the Tax Office, or online, including on the corresponding city council’s website.

To calculate the Plusvalía Tax, confirm and have these data handy, which will be necessary for the calculation:

• Purchase Price: What the house cost when acquired.
• Sale Price: The amount received for the sale.
• Cadastral Value: The total cadastral value of your home.
• Percentage of the Cadastral Value of the Land: This data can be found on a Property Tax (IBI) receipt.
• Years of Ownership: The time you have been the owner of the property.

The calculation of the tax base for this tax is carried out considering the cadastral value of the property and the period during which the seller, donor, or deceased was the owner of the same. With this information, the increase in value that the property has experienced is determined. Then, the tax rate set by the local council, which cannot exceed 30%, is applied. This process allows calculating the amount to be paid for the concept of capital gains.

These are the tax rates of the main cities on the Costa del Sol:

• Mijas: 30%
• Manilva: 27-30%
• Marbella: 29%
• Málaga capital: 29% (unchanged).
• Torremolinos: 28%
• Benalmádena: 27.5%
• Fuengirola: 25%
• Estepona: 20%

To make an adequate calculation of Plusvalía Tax, it is also essential to know the maximum anual rates that can be applied to the value of the asset, depending on how long the seller has owned it:

• For a period of up to 5 years, the rate is 3.7%.
• For ownership up to 10 years, a rate of 3.5% applies.
• If the property has been held up to 15 years, the rate is 3.2%.
• For properties retained for 20 years or more, the rate is 3%.

Let’s attempt to calculate a hypothetical capital gains tax.

For example, let’s calculate this tax for someone selling their house in Estepona:

• The original purchase was in 2002.
• The house is sold in 2022.
• The purchase price was 200,000 euros.
• The current sale price is 300,000 euros.
• The cadastral value of the land is 65,000 euros.

The calculation of the tax:

• The age of the property is 20 years.
• The annual increase is 3%, resulting in a total increase of 60%.
• The tax base is 65,000 euros multiplied by 60%, equal to 39,000 euros.
• The tax rate applied by the Estepona city council is 20%.
• The tax amount is 39,000 euros multiplied by 20%, resulting in 7,800 euros.

Therefore, the seller must pay 7,800 euros in municipal capital gains tax.

Here you can consult these Capital Gains Tax calculators:

• Provincial Council of Málaga Calculator
• Plusvalia.com Calculator
• Idealista Capital Gains Tax Calculator
• Fotocasa Calculator

CAPITAL GAINS TAX

After selling your property, when you file your annual Personal Income Tax (IRPF) return, it will be necessary to include both the capital gains and losses you have experienced throughout the fiscal year, which can come from the sale of assets such as a dwelling.

• If you register a loss, that is, if the sale price is lower than the purchase price, you can offset this loss with any other capital gain you have had during the same fiscal period. This compensation mechanism can help you reduce the total amount of tax payable on your return.

• If you have a gain, that is, if you sold the property for a price higher than what you bought it for, this difference is considered a capital gain and must be taxed according to the corresponding tax rate. The applicable tax rate varies depending on the amount of the gain. The tax rates for capital gains in the IRPF are applied progressively, which means that each segment of the gain is taxed at a different rate, not all at the same percentage.
  • Up to €6,000 of gain: This portion is taxed at 19%. That is, if your gain is €6,000 or less, this percentage is applied to the total gain.
  • From €6,000 to €50,000 of gain: The amount that exceeds €6,000 and up to €50,000 is applied a 21%. This means that only the amount of the gain that falls within this range will be taxed at this percentage.
  • Between €50,000 and €200,000 of gain: The part of the gain that falls within this range is applied a 23%. Only the amount that falls into this bracket is taxed at this percentage.
  • More than €200,000 of gain: Any amount that exceeds €200,000 will be applied a 26%. Only the portion of the gain that exceeds €200,000 is taxed at this percentage.

¿How to calculate the Capital Gains Tax?

To determine the capital gain resulting from the sale of your home, you need to subtract the purchase cost (what you originally invested to acquire it) from the price at which you ultimately sell it.

Capital Gain = Sale Value – Acquisition Value

Sale Value: This is the sale price of the dwelling minus the taxes and expenses you have assumed for the sale.

Sale value = sale price – real estate agency fees – municipal capital gains tax – mortgage cancellation registration expenses (if any)

Acquisition Value: This is the price for which you bought your dwelling, to which are added the expenses, taxes, significant improvements, and investments you have made. That is, you can include the Notary expenses at the purchase, the Property Transfer Tax (ITP) or VAT, the Stamp Duty (IAJD), and the expenses of significant reforms or repairs you have made (kitchen renovations, bathrooms, extensions…). Interest and mortgage commissions are not included in these expenses.

Acquisition value = purchase price + notary expenses + ITP or VAT + IAJD + expenses for reforms and repairs

Example:

Sale value: €300,000 – €15,000 – €2,000 – €700 = €282,300

Sale price: €300,000

Real estate agency fees: €15,000

Municipal capital gains tax: €2,000

Mortgage cancellation registration expenses: €700

Acquisition value: €210,000 + €700 + €14,700 + €10,000 = €235,400

Purchase price: €210,000

Notary: €700

ITP 7%: €14,700

Reforms: €10,000

Capital gain: €282,300 – €235,400 = €46,900

IRPF (Income Tax):

First €6,000 x 19% = €1,140

Rest of the gain in the second bracket (€46,900 – €6,000) x 21% = €8,589

Result: €1,140 + €8,589 = €9,729

DISCOUNTS OR EXEMPTIONS IN THE PAYMENT OF CAPITAL GAINS TAX

If you acquired your home before December 31, 1994, you might have the opportunity to decrease the capital gain generated by the sale, thanks to a transitional regime. This could result in paying less income tax on such gain. The Tax Agency offers a detailed guide on how you can take advantage of this benefit when selling your property.

Furthermore, there are certain conditions under which the capital gain from the sale of a property can be exempt from taxation in the IRPF (Income Tax for Individuals). For example, if at the time of sale you are 65 years or older and the property is your habitual residence, or if you plan to use the total obtained from the sale to purchase another dwelling that will become your new habitual residence.

For a deeper understanding of the exemptions available when selling your property and how they can apply to your situation, I recommend consulting the resources provided by the Tax Agency. These documents offer valuable information about the exemptions applicable to the sale of the habitual residence, including special conditions for sellers over 65 years old.

Resident or Non-Resident seller?

Whether a person is Spanish or foreign, if one or both parties of the sale are foreigners, and whether they are residents or not, all of this affects the taxation and notarization of the sale.

If you, as the seller, are a non-resident in Spain, the notary must withhold 3% of the purchase price as an advance tax (income tax for non-residents, IRNR), which must be paid to the authorities. This amount is an advance retention of the tax on the seller for any capital gain. The retention must be made even if there is no actual gain from the sale. If applicable, the seller may file a tax return at the end of the transaction to receive a total or partial refund of the withheld tax. The buyer only needs to withhold this tax and pay it into the tax office’s account. Before signing the deeds, the notary must know how the payment will be handled.

The most convenient way to do this is for the buyer to sign a check for 3% of the transaction amount that will go directly to the tax authorities. In this way, the matter is resolved immediately. This withholding is only carried out when the seller is non-resident and is not necessary if the seller has owned the home for 10 years before December 31, 1996.

Something similar occurs with the Capital Gains Tax. If the seller is a non-resident individual in Spain, the amount of the Capital Gains Tax will be withheld by the buyer from the agreed sale price and will be declared and settled in the name of the seller to the competent authorities.

1. Real estate agency fees: The seller is responsible for paying the real estate agent’s fees as contractually agreed in the Sales Mandate. It is common for the buyer’s lawyer to prepare checks, including these fees in the settlement of the sale price.
2. Legal fees: The seller will cover the fees of their own legal and tax advisors, which on the Costa del Sol is usually 1% of the sale price.
3. Municipal value gains tax: This tax is due to the city council and is calculated based on the increase in value of the property from the original purchase date to the sale date. The seller’s lawyer can obtain the exact amount at the city council, with a maximum limit of twenty years. You can also use the calculator at this link to get an approximation of your Capital Gains Tax: go to the calculator.
4. Capital Gain: All sales are subject to Capital Gains Tax, with different rules and tax rates depending on the seller’s situation, whether resident or non-resident, or if it is a company selling the property.
   • Non-residents: Property sales owned by non-residents will involve a withholding of 3% of the sale price before the notary, which will be paid to the Spanish Tax Agency against possible capital gains. The purchasing party will withhold this amount and submit it to the Spanish tax authorities, and the seller must settle their corresponding taxes.
   • Residents: Fiscal residents will not be subject to the 3% withholding before the notary but must declare the sale in their annual income tax return.
5. Mortgage cancellation expenses: The seller will pay the expenses related to the cancellation of mortgages ensuring that it is sold free of charges and encumbrances.
6. Outstanding payments: Spanish properties are usually sold free of charges, so any outstanding debt must be settled before the sale or be withheld by the buyers’ lawyers to ensure payment. A debt certificate from the community of owners will be required, and if there are outstanding payments, the buyers’ lawyers will withhold them from the sale price. Likewise, the lawyers will check local taxes and utility bills to confirm they are up to date. The same procedure will apply to any other type of debts related to the property.