This guide do not substitute professional advice, which we will be happy to provide on request.

A capital gain as a result of the sale of real estate property is subject to taxation. When a change in property takes place the income is considered due.
In general terms, a capital gain is determined by subtracting the purchase value from the sale value.
The purchase value is made up of the price paid for the property to which the amount of the expenses is to be added, excluding interest rates, and taxes related to the acquisition, , that have been paid by the present transferer. This value is to be modified by the application of the up-to-date coefficients established on an annual basis by the General Budget , depending on the year of purchase.

The application of these coefficients requires that the property had been acquired at least one year before the date of sale.

If the property had been rented, the purchase value determined as mentioned before, must be reduced by the amortization corresponding to the rental period. The amortization is to be updated by the mentioned coefficients depending on the year.
The sale value is the amount for which the transaction has been carried out, having deducted the amount of the expenses and taxes referring to the transfer which the vendor has been responsible for.

The difference between the sale value and the purchase value, so determined, will be the capital gain subjected to taxation .

Nevertheless, if the property that is presently transferred had been acquired prior to December 31, 1994, the capital gain will be divided in two parts:

a) The proportion of the gain from the date of the purchase to 19th January 2006.

b) The proportion of the gain from 20th January 2006 to the date of sale.

The gain of the first part will be reduced by 11.11% annually for each year of ownership exceeding two years from the year of acquisition to 31st December 1996 rounded to the next higher whole number. The gain will be taxed.

If the individual who is selling the property had acquired it on two different dates or the property has been improved, the evaluation has to be undertaken as if they were two different capital gains, with different ownership periods for the application of the reduction coefficients and different up-to-date coefficients.

The person who purchases the property, even if he/ she is resident or not, is obliged to withhold and pay to the Treasury 3% of the agreed price. This payment is to be considered in the case of the vendor, as an advance payment of the tax corresponding to the transaction. Therefore, the purchaser has to forward to the non-resident vendor a copy of form 211 that has been used for the payment of the withholding in order for the vendor to be able to deduct this amount from the tax due to be paid, as a result of the assessment of the capital gain. If the amount withheld exceeds the tax due, the vendor may request a tax-refund.

In case that the withholding is not paid, the property will be tax due.
· Tax form to be used is form 212. Only in case of a property to be sold, that is co-owned by a non-resident married couple, a single tax-assessment may be filed.
· Filing period: Three months after the end of the deadline of the period for payment of the withholding. The purchaser has to make the payment of the withholding no later than one month after the date of sale.
· Filing place: At the District or Local Office corresponding to the location of the property.

Tax-refund of the excess withheld: In case of capital losses or in case that the withholding exceeds the tax due, it is your right to receive a tax refund of the excess withheld. The refund procedure starts with the presentation of a 212 form at the District or Local Office indicated. The refund will be forwarded by means of a bank transfer to the account stated in the return. The account holder has to be the taxpayer or representative. In the latter case, the representative has to be lawfully entitled to receive the payment. In case that there is no bank account open in Spain, a cheque payment may be requested. In any event, the 211 form filed with the withholding payment has to be attached to the 212 form for non-residents.

The Tax Administration is obliged to carry out a provisional settlement within six months following the deadline established for the filing period of form 212. If the provisional settlement has not been performed within this period, the Tax Administration will forward the excess of the self-assessed tax due. Once six months have passed, without having ordered the refund, due to reasons attributed to the Tax Administration, interests rates on the amount pending payment will be paid.