Personal Income Tax, how to declare the sale of a flat

The integral loss or gain resulting from the negotiation of a flat located on the Costa del Sol is directly related to the PIT, one of the basic pieces of the Spanish tax system for declaring the sale of a flat. In other words, both calculations depend on the purchase price and the sale price of the property. Therefore, to undertake a tax declaration procedure, it is very important to follow a series of steps and requirements of a bureaucratic nature and others concerning the taxes to be paid.



What are the taxes and where do they have to be paid?

In order to know exactly what taxes must be paid, it is necessary to know exactly how the sale of a flat is declared from the PIT or Personal Income Tax. Once all the paperwork has been signed, it would seem that everything is over.

However, the reality is that the paperwork extends to the tax return for the tax year of the transaction. On the other hand, the capital gains tax, i.e. the tax on the increase in value of the property, must be taken into account. This amount is taxed by the municipalities responsible for this.

Therefore, we can define the capital gain as the revaluation obtained by the owner of a house or land when selling it. In the case that no profit has been generated, it will be exempted from the payment of the tax.

This capital gains tax has two versions: the one that is paid to the Treasury through the Personal Income Tax, and the one that is cancelled in the form of a municipal tax.

However, in this regard, it is vital to remember that, in recent years, the Municipal Capital Gains Tax has undergone various modifications, making it possible to access refunds and/or discounts.


Knowing the real profit

Before making an offer, it is very important to know the real profit from the sale of an apartment on the Costa del Sol. This is calculated based on the difference between the purchase value and the sale value, multiplied by an update coefficient.

These coefficients are set by the tax office itself and vary according to the year in which the property was acquired. In this sense, it is necessary to highlight that, after the tax reform approved in 2015, the updating coefficient is not applied to properties acquired after that date in the calculation of the capital gain.


Calculation of the PIT payment for the sale of a flat

There are three main concepts, plus an additional fourth, which determine the acquisition and transfer value of a property. The first is to define the actual amount of the acquisition.

When the acquisition of the flat that was sold or transferred was for valuable consideration, its value will be the actual amount for which it was acquired. On the other hand, it is necessary to be clear about the cost of investments and renovations of the flat. If such investments and improvements have been made, their cost will be added to the acquisition value.

Thirdly, the costs and taxes inherent to the acquisition will be added to all other costs and taxes inherent to the acquisition that have been paid by the purchaser, with the exception of interest. Finally, depreciation has to be taken into account, as it has to correspond to the whole list of depreciable assets, in order to reduce the value of the property.

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