Understanding Capital Gains Tax on Spanish Property Sales
Selling a property in Spain triggers capital gains tax obligations that every owner must understand before listing. Whether you are a Spanish tax resident or a non-resident selling your Mallorca villa, the tax implications can significantly affect your net proceeds.
What Is Capital Gains Tax in Spain?
Capital gains tax (Impuesto sobre la Renta de las Personas Fisicas, or IRPF) applies to the profit made from selling a property. The gain is calculated as the difference between the acquisition value (purchase price plus associated costs) and the transfer value (sale price minus selling expenses).
Tax Rates for Residents (2026)
Spanish tax residents pay progressive rates on property gains:
- First 6,000 euros: 19%
- 6,001 to 50,000 euros: 21%
- 50,001 to 200,000 euros: 23%
- 200,001 to 300,000 euros: 27%
- Over 300,000 euros: 28%
Tax Rates for Non-Residents
Non-residents from EU/EEA countries pay a flat rate of 19% on capital gains. Non-EU residents pay 24%. The buyer is legally required to withhold 3% of the sale price and pay it directly to the Spanish Tax Agency (Agencia Tributaria) as an advance payment on the seller's behalf.
Calculating Your Taxable Gain
The acquisition value includes:
- Original purchase price
- Transfer tax (ITP) or VAT paid at purchase
- Notary, registry, and legal fees at purchase
- Cost of permanent improvements (not maintenance)
The transfer value includes:
- Sale price
- Minus: estate agent commission
- Minus: legal fees for the sale
- Minus: energy certificate costs
Key Exemptions and Reliefs
Principal Residence Exemption (Over 65s): If you are over 65 and the property has been your principal residence for at least three years, the gain is fully exempt from tax.
Reinvestment Relief: If you sell your principal residence and reinvest the full proceeds in a new principal residence within two years (before or after the sale), the gain is exempt. Partial reinvestment results in proportional exemption.
Habitual Residence for Over 65s: Sellers over 65 who sell any property and use the proceeds to create a life annuity (renta vitalicia) within six months can exempt up to 240,000 euros of the gain.
Municipal Capital Gains Tax (Plusvalia Municipal)
In addition to IRPF, sellers must pay the Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana, commonly known as plusvalia municipal. This local tax is based on the increase in land value during ownership.
Since the 2021 Constitutional Court ruling, municipalities offer two calculation methods:
- Objective method: Based on cadastral value multiplied by coefficients set by the municipality
- Real method: Based on the actual gain proportional to land value
Sellers can choose whichever method results in a lower tax bill. If you sell at a loss, no plusvalia is due.
Planning Your Sale with Balearic Blue
At Balearic Blue, our team works closely with leading fiscal advisors in Mallorca to ensure every seller understands their tax position before going to market. We coordinate with your tax advisor to structure the sale optimally, whether that means timing the transaction, documenting improvement costs, or exploring reinvestment opportunities.
Ready to understand your tax position? Contact our team [blocked] for a confidential property valuation and introduction to our trusted fiscal advisory partners. Or explore our Fiscal Advisory Guide [blocked] for a comprehensive overview of property taxation in Spain.
