Everyone who sells a property wonders what taxes are payable on the sale of a property in Mallorca, but many people ask this question at the wrong time.
It often happens to me that clients first put the property on the market and when they already have a buyer with whom they have agreed the price, they wonder what taxes they are going to pay.
In my opinion, the tax calculation should be done earlier. I would like to add something else. You don’t just have to calculate the taxes, you have to plan for it.
The taxes you pay when selling a property in Mallorca, or anywhere else in Spain, are set in the tax regulations and are not modifiable, what is modifiable are the assumptions.
That is to say that you do not pay the same taxes if the planning is correct because circumstances can change.
Taxes paid on the sale of a property in Mallorca, general case.
The taxable base is always the net profit. That is, the sale value, minus the purchase value, minus deductible expenses.
Tax residents in Spain are taxed on the sale in their annual income tax return, the IRPF. This tax is payable in June of the following year and is scaled. That is to say, the higher the profit, the higher the tax, ranging from 19% to 28%.
Non tax residents in Spain, have to pay the 210 tax form within 4 months after the sale. 19% of the net profit is paid.
Correct planning of the taxes payable on the sale of a property in Mallorca.
Clarify your tax residence.
Whether or not you are a tax resident is a fact. If your interests are in Spain and you spend more than 183 days a year in Spain, you are a tax resident. Then there are the indications, for example, if your minor children are studying in Spain, it is a clear indication that you are a tax resident here.
In other words, you cannot choose to declare that you have been a tax resident or that you have not been a tax resident. But if you are going to sell a property you have to be sure that you can prove what the reality is.
I would like to add something else. If you are a resident and that brings you advantages, it is a mistake to stop being a resident at the moment of selling.
Some practical cases
Case 1. The sale of the main residence is not taxed if the profit is reinvested in the next main residence if there are less than two years between the purchase of one property and the sale of the other. For this you have to be a tax resident. I often come across people who have problems proving that they are tax resident in Spain and therefore have problems qualifying for this benefit. They are, but they do not plan the sale correctly and want to get a tax residency certificate the day before the sale.
Case 2. Every year I come across several cases of foreign tax residents who retire and return to their country of origin after putting their property up for sale. Time passes and when they find a buyer they are NO longer resident in Spain because they have returned to their country. The sale of the habitual residence of a resident over 65 years of age is not taxed. However, they end up paying large amounts because they have lost their residence. Correct planning would have indicated that they should have put the property on the market earlier or they should have stayed in Spain a little longer.
Case 3. Only happened to me once. A client put the property up for sale without the correct advice, signed a commitment to sell and sold the house with ONE MONTH to go before his 65th birthday. He lost the bonus. It would have been enough to extend the sales contract for another month, but the buyer did not accept.
Reinvestment for the purchase of a main residence outside Spain
Taxes are payable on the sale of a property in Mallorca, but are not payable if it is reinvested in a new main residence in another EU member state, Iceland, Norway or Liechtenstein.
Conclusion: Before selling your property, the first thing to do, even before deciding on the price, is to consult an expert about the taxes you will pay and how to optimise your situation.
If this is your case. I will be happy to help you.