Springtime is the moment to blossom, grow wings, and fall in love again. Are you feeling this ethereal push forward and want to make your money move? Well, spring is the moment in the year to make the boldest moves. Just look around the entire world is leaving the past behind and dressing in bright colors for a new life. Sell your property reducing taxes and enjoy the extra cash in your pocket in the best season of the year.
Being tidy is more profitable than you thought
When buying property in Spain, you are paying several invoices (including VAT) and a transfer tax. That is pretty much common to any other country in the world, but did you know that those could be written off when selling?
Well, in case you didn´t, this is a positive news flash. Moreover, this move will allow you to save big money (AKA thousands of Euros) when selling the property. The only requirement you need to abide by is having every receipt from the moment you purchased the property.
Thus, the lesson is, being tidy with your papers, means a lot of money in the long run.
What expenses and taxes can be written off?
Let´s release the scoop right away and help your anxiety. As a non-resident seller, you are entitled to a staggering 3% CGT tax rebate. Furthermore, you can add to that number some legal interests.
To make it even clearer, your legal help can write off several acquisition and sales-related expenses. This, in turn, will reduce drastically the value of the property (for tax purposes only). Hence, since you´re making less money on paper, you are also paying significantly less in taxes upon concreting your sale.
What is CGT?
We spoke about a reduction in the CGT, but what is this really? Well, in case you´re not familiar with it, the acronym stands for Spanish Capital Gain Tax. This is a tax that non-resident sellers pay over the profit emerging from the sale itself.
How does the Spanish government calculate the profit? Well, they make the difference in purchase prices on the title deeds.
CGT is then calculated over the net gain, not the price of the property. Thus, if your new deed has a reduced value when comparing it to the first one, your net gain will be lower. As a result, you’ll end up paying a reduced amount.
VAT invoices reduction on buying and selling
Saving on CGT is not the only way of saving. Let´s take a look at some of the VAT invoices and taxes that can be cut from your CGT bill. As we said above, this will drastically change the sales tax you pay for selling your Spanish property.
When buying
Keeping all the original receipts will help you calculate these numbers easier:
- Notary fees
- Taxes
- Land Registry fees
- Lawyer’s fees
When selling
Again, to prove this at the time of selling, you need to have the original paperwork.
- Any and all improvements made to the property while you were the owner. These should be modifications done to the property that has nothing to do with maintenance. For example, fitting a new alarm, A/C installation, re-tiling the roof, or installing a new wood floor could be some examples. On the other hand, gardening could be an example of maintenance.
- Lawyer’s fees
- Estate agent’s commission
Conclusion
When buying and selling property, being tidy can pay off in the long run. Follow our advice, and make the most out of your investment. Furthermore, capitalize the improvements made to the house and reduce the numbers in your taxes.
Be wise, invest well, and live the life you´ve always dreamt of.
