The tax office is warning Spaniards about personal income tax for property owners.

All Spaniards who own an apartment or house have received a notification from the Fiscal Service about their tax liability for ODFNagency ATLAS. There are situations in which taxpayers can take advantage of the sale of their home and be exempt from paying personal income tax (ODFN). Among them are persons over 65 years of age and people in a state of dependency, they are not required to declare the profit from the sale of real estate.

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The Money Service (AEAT) has issued a statement warning residential property owners of their tax obligations once the sale of their property is complete. According to the AEAT statement, there are three taxes that sellers must pay. The first is the so-called real estate tax (TIN), which is divided proportionately between the buyer and seller based on the time each has owned the property. The second tax is the municipal appreciation tax, which must be paid within 30 business days of the sale of the home. Finally, sellers must also account for personal income tax (PIT), in which they must report any potential gains from the sale of the property on their next income tax return.

NOTIFICATION BY THE OWNERS OF THE DWELLING

However, there are situations in which taxpayers can take advantage of the sale of their homes and be exempt from paying personal income tax.

In addition, there are other ways to obtain a personal income tax exemption, such as transferring real estate to pay off debt or reinvesting in a principal residence. In the case of transferring real estate to pay off debt, both insolvency and lack of other assets must be proven on the return. On the other hand, when transferring a principal dwelling with reinvestment, it is necessary to declare the intention to exercise this option and to ensure that the transferred and/or remodeled dwelling meets the requirements to be recognized as a principal dwelling.

The Fiscal Service also provided a clarification on its website regarding reinvestment in the principal dwelling, "If the amount reinvested is less than the total amount received from the foreclosure, only the pro rata portion of the gain actually invested in the conditions mentioned above will be exempt from income tax."

In addition, it is important to take into account the relevant boxes in the tax return. According to the Consumers and Users Organization (CUO), in 2022, the cadastral number must be entered in column 1626 if there are economic activities that depend on the houses transferred and they are part of the main dwelling.

Taxpayers need to be aware of their tax obligations when selling a home, including the pro-rata payment of TIN, municipal capital gains and declaration of the eventual gain on the sale of the property on their personal income tax return. However, there are certain instances where it is possible to obtain an exemption from paying personal income tax, such as in the case of those over the age of 65, those who are dependent or those who reinvest the money in the purchase of another main residence. It is important to familiarize yourself with the requirements and fill in the appropriate boxes on your tax return correctly.