Notification from the Treasury Department for all Spanish homeowners.

The Tax Agency (AEAT) has released a statement warning property owners about their tax obligations at the conclusion of the process of selling their property. According to AEAT information, there are three taxes that sellers must pay.

1. Property tax (IBI)

The first of these is the well-known property tax (IBI), which is divided proportionally between the buyer and the seller based on the time each of them has owned the property.

2. Municipal capital gains tax

The second tax is the municipal capital gains tax, which must be paid within 30 working days after the sale of the property.

3. Personal Income Tax (IRPF)

Finally, sellers must also take into account the personal income tax (IRPF), in which they need to report any potential capital gains in their next income tax return.

Exemption from paying IRPF

The AEAT also reports that those who reinvest the money received from the sale into the purchase of another permanent residence within two years before or after the transaction can also benefit from this exemption.

However, both the purchased and sold properties must meet the condition of being used as permanent residences, and the seller must have lived in the sold property for at least three years. In cases where no capital gains are obtained from the sale of the property, it does not need to be reported in the IRPF.

In addition, there are other ways to obtain an exemption from paying IRPF, such as transferring property to settle a debt or reinvesting in permanent housing.

Transfer of property in settlement of debt

In the case of transferring property in settlement of a debt, it is necessary to prove both the fact of insolvency and the absence of other assets in the declaration.

Reinvestment in permanent housing

On the other hand, if the transfer of the primary residence occurred with reinvestment, it is necessary to express the desire to take advantage of this option and ensure that the transferred property and/or the renovated property meet the requirements to qualify as a primary residence. AEAT also provided clarification on its website regarding reinvestment in a primary residence: "In the event that the amount of reinvestments is less than the total received from the transfer, only the proportional part of the capital gain corresponding to the actual amount invested under the aforementioned conditions will be exempt from tax liability."

Important sections in the income tax declaration

Additionally, it is important to consider the relevant sections in the income tax declaration. According to information provided by the Organization of Consumers and Users (OCU), in 2022, section 1626 is where you should indicate the cadastral number in the case of economic activities related to transferred properties that are an annex to permanent housing.

Contributors should be aware of their tax obligations when selling real estate, including the proportional payment for IBI, the municipal tax on the increase in value, and the declaration of potential capital gains in the IRPF.