When selling a Las Palmas property it is complex to work out what the buyer and seller pay in terms of taxes and fees. Here is my guide to the costs and procedures associated with selling Las Palmas de Gran Canaria property.
My advice is to use a local gestoria to handle all the admin for you. This happens automatically if you buy with a mortgage. If you pay in cash, a gestoria saves you time and hassle because they already know exactly what to do.
Costs and procedures before selling a Las Palmas property
There are no taxes or fees to be paid prior to selling a Las Palmas property. However, you must have your communidad fees and IBI tax payments up-to-date. An Energy Performance Certificate (certificado energético) is also a legal requirement.
Provide the most recent IBI bill, a certificate from your communidad (admin companies can charge 25 euros for it) and the certificado energético (which costs 60 euros)
The seller pays the IBI corresponding to the months of the year that they owned the property during the sale year. In practice, the seller normally pays the whole of the IBI for the sale year by direct debit. The buyer returns their share for the months remaining in the year.
Costs and procedures during and after the sale
Almost all costs associated with the purchase of a property in Gran Canaria are paid by the buyer. The exception is Plusvalia Tax, a municipal tax on the increase in value. This is paid by the seller.
Plusvalia tax in Las Palmas
The formula for calculating plusvalia is complex. The total due depends on the amount of time you have owned a property, value of the property, and the coefficient applied by the local Ayuntamiento (Town Hall).
If you sell a property at a loss, there is no Plusvalia to pay thanks to a 2021 change. There are now two formulas and you choose the one that produces the smallest bill. Use this online calculator to calculate your Plusvalia bill. You need the cadastral value from an IBI receipt.
Notary costs: Who pays them?
The costs incurred at the the notary, such as the issuing of the title deeds and official copies of them, are paid by the buyer in Gran Canaria. This is despite Spanish law suggests that some of it should be paid by the seller…
The law says: “The expenses of granting deeds will be borne by the seller, and those of the first copy and the others after the sale will be borne by the buyer, unless otherwise agreed”
In practice, the seller does not need a copy of the new deeds. Therefore these costs are almost always paid by the buyer. Lawyers working with buyers sometimes try to argue this point but it is up to the seller to decide. Notaries assume that the buyer pays.
Capital gains tax in Gran Canaria
Assuming you sell at a profit, you pay capital gains tax (IRPF) unless you are exempt. This is done during your next annual tax declaration (in May or June of the year after the sale).
The capital gains tax rate ranges from 19% to 26% for Spanish citizens and residents. Non-residents pay a flat rate of 24%.
For residents, you pay 19% on the first 6000 euros of profit (after expenses), rising to 26% for profits above 200,000 euros.
Deductions include the expenses incurred during the original purchase of the property, such as lawyer’s fees, notary’s fees, registry’s fees, IPT tax (IGIC for new builds). So keep all paperwork related to the purchase of a property.
You can’t deduct the costs of maintenance and minor refurbishments. However, large scale refurbishments can be deductible (ask your tax-representative about this as opinions vary).
Capital gains tax exemptions in Gran Canaria
You are exempt from IRPF on the profits of your property sale if you…
- Sell at a loss
- Are resident, over 65 and sell your prime residence.
- Resident, under 65 and use the proceeds of the sale of your prime residence to buy another prime residence within two years. EU citizens can buy a new prime residence in any EU country.
- Over 65s can also avoid capital gains tax by investing the proceeds of a sale in pension annuities within six months.
Sellers who are not fiscally resident in Spain have 3% of the sale price retained by the Spanish taxman to prevent tax evasion. If your total tax bill is less than 3%, you get the surplus paid back into your Spanish bank account. Get your gestoria or lawyer to manage this. It can be a long and laborious process.
Estate agency fees in Gran Canaria
The standard estate agency commission in Gran Canaria is 5% of the sale price. This includes all costs associated with marketing the property and is only paid if and when it sells. A good agent adds real value to the sale by promoting it well and knowing the market well enough to negotiate from a strong position.
Since most buyers make an offer, an agent who can justify the market price often saves you far more than you pay in fees.
A quality agent also guides you through the sale process and makes sure that the sale doesn’t collapse or get delayed due to an avoidable pitfall.
For more on what a good estate agent does to sell a Gran Canaria property, and how using one can save you a lot of time and money, see this article.