Tax planning investment purchasing

When you have made a decision to sell and have found a buyer for your property, you will now be facing and calculating the taxes you will be faced with upon completing the sale, as the taxes to be paid will be coming out of your profit. Unfortunately if you are a non-resident in Spain then the tax percentage will be higher and you will initially have a small part of purchase price retained to cover your taxes. 

 
When you sell your property the IVA (added value tax) is not paid by the vendor as it was paid upon purchase and will be the Transfer Tax by the buyer of the property. The taxes that you will have to pay are the PLUS VALIA, and CAPITAL GAINS. You must also have paid all the IBI or council taxes lending up to the sale. 
 
Plusvalía Tax
 
The “plusvalía” is an indirect tax that is calculated on the increased value of the property over the amount years you have been the owner. It is only the amount that the property´s value has gone up while you have owned it; it is not the total value. It is based on the present market at the time of selling.  
 
Capital gains liability tax for residents and non-residents
 
This will tax any income made from the sale and is a personal assessment. If you are a resident, then you are simply to declare the money made from the sale and it will be taxed accordingly in your tax returns, where it will state how much taxes you will need to pay for that year. If you are a non-resident then 3% of the purchase price will be paid directly to the tax authorities to deduct the amount to corresponding taxes, and if there is any left all you are entitled to reclaim it, after a certain period has passed, usually around 3 months, when the new deeds come out. 
 
For example if you brought the property for 100,000 euros, your property over the years has increased by 15,000 according with the difference of the cadastral value, and you sell at 120,000, then the taxable amount for the plusvalia a percentage of the 15,000. The 5000 euros of profit is what the capital gains will tax cover, which will either be taxed through your Spanish tax return declaration or through the non-residents retention.
 
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