Selling a Property in Tenerife
If you’re planning to sell your property in Tenerife, you’ve come to the right place. Tenerife*Property is with you throughout the process.
One of the first decisions when you need to make to sell your property, is which Real Estate Agency to turn to. Many local real estate agents in Tenerife charge 5% commission, with some larger international chains charging even more; 6% or even 7% in some cases.
Tenerife*Property currently charge a 4% commission in the event of a successful sale to a buyer referred by us, and we reach financially strong buyers throughout Europe, Scandinavia, and Russia.
When a buyer is found who wants to buy your property, Tenerife*Property acts as a mediator between you and the buyer, negotiating the selling price.
Once the price is agreed on, a private sale/purchase contract is drawn up. This private contract, between you as seller and the buyer, should contain details of the agreed purchase price, the deposit payment (usually 10%, paid into a solicitor’s escrow account), provision for payment of the outstanding balance, any extras, e.g. furniture, the intended completion date and all other relevant terms and conditions.
On the day of completion, you meet with the buyer, and the buyer’s solicitor, at the office of a Public Notary. Normally your Tenerife*Property real estate agent also attends.
The Notary Public prepare the Property Title Deeds, (Escritura de Compra Venta), identifies all signatories, and witness the signing of the deeds. At this time, the byer will also pay you the remaining balance of the purchase price.
Capital gains tax
The capital gains sum is calculated on the difference between the price you paid when you purchased the property (including taxes and fees), and the price you sell it for. Certain costs are deductible from the gross capital gain, such as the costs for selling (such as the Estate Agent commission, plusvalía tax, solicitors fees, etc).
If you aren’t a Spanish resident
If you aren’t a Spanish resident, 3% of the purchase price will be retained, to cover any capital gains tax that may be due on your profit from the sale. This means you only receive 97% of the sale amount, until the taxed are paid. If more capital gains tax is due, you will have to pay the extra, if not, you’ll receive a refund for the difference. The 3% retention is for the Spanish tax office to safeguard so that non-residents don’t “disappear” before they have paid the capital gains tax.
If you aren’t a Spanish resident, the capital gains tax on the sum as calculated above is 19% of the gain if you are a resident in the EU, Norway, or Iceland, and 24% if you are a resident in any other country.
If you are a Spanish resident
If you are a Spanish resident, you declare the capital gains tax on your annual tax declaration, and the amount depends on your income. If you are over 65, and the sold property was your principal home for at least the last 3 years prior to the sale, and you have been a tax resident for at least the same amount of time, then you are exempt from capital gains tax.
You can also be exempt from paying capital gains tax if you have been a tax resident in Spain for at least 3 years, and the sold property was your principal home. Then, if you reinvest your money in a new principal home, and continue to live in this new principal home for at least 3 years, you will be exempt from paying capital gains tax.
The new principal home can be anywhere in the EU, but you must reinvest all the capital gain or you will have to pay tax in Spain on the difference.
Also, if you move from the new principal home within 3 years, you will be liable for capital gains tax in Spain.
Plusvalia is a tax paid by you as seller to the Town Hall (Ayuntamiento). It is calculated on a theoretic value of property and the number of years that have passed since the property last changed hands. The objective is to tax the increase in the value of the land on which the property stands.
The base for this tax is the cadastral value (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount due in tax will depend on how long the seller has owned the property: the longer the period, the higher the amount of tax. When the seller is non-resident in Spain, the buyers’ solicitor will retain the amount of the plusvalía tax from the selling price and pay the tax on the sellers' behalf, as in those cases the buyer become liable if that tax is not paid. As well, not to acknowledge the Council of the need of charging the plusvalía tax will make a property not qualify to be registered at the buyers’ name even if the buyer meets all other requirements.