Deductible Expenses on the Sale of a Property
When selling a property in Spain, understanding which expenses are tax-deductible is essential to calculate the real capital gain and avoid paying more tax than necessary. The Binding Resolution of the Directorate General for Taxation (Dirección General de Tributos – DGT) clarifies this question, providing key criteria for both residents and non-residents who sell real estate in Spain.
1. What are deductible expenses when selling a property?
According to recent binding rulings of the DGT, the following costs may be deducted from the sale price when calculating the taxable gain:
- Real estate agency commissions
- Notary and Land Registry fees related to the sale
- Legal and consultancy fees incurred for the transaction
- Energy efficiency certificates or other technical reports required for the sale
- Municipal taxes paid by the seller prior to the transaction, such as IBI (Property Tax) or Plusvalía Municipal, when legally assumed by the seller
- Capital improvements or renovation costs, provided they can be proven with invoices and increase the property’s value
These deductions reduce the taxable base for Capital Gains Tax (IRPF or IRNR), ensuring a fairer assessment of the seller’s profit.
2. The importance of evidence
The DGT emphasises that every expense must be properly justified. This means having valid invoices and receipts with the seller’s name, the property address, and proof of payment. Without proper documentation, deductions may be rejected by the Spanish Tax Agency (AEAT).
🧾 Tip: Always keep invoices from lawyers, notaries, and estate agents involved in the sale, as well as proof of bank transfers or card payments.
3. Tax impact for residents and non-residents
- Residents in Spain will include the gain in their annual IRPF (Personal Income Tax) declaration.
- Non-residents, such as foreign property owners, are subject to IRNR (Non-Resident Income Tax). In this case, a 3% retention is withheld from the sale price as a prepayment of possible tax liability.
If the seller has overpaid due to unclaimed deductions, Frau Legal can manage the refund request and file the necessary rectifications with the Spanish Tax Office.
4. Related regulations
The current interpretation is based on the following legal sources:
- Article 35 of the Personal Income Tax Law (Law 35/2006)
- Articles 10 and 25 of the Non-Resident Income Tax Law (Royal Legislative Decree 5/2004)
- Binding Resolutions such as V0801-17, V0257-20, and subsequent rulings of the DGT
For official reference, visit the Dirección General de Tributos database (external link).
5. Why seek professional tax advice
Spanish tax law is complex, and each case may vary depending on the type of ownership, residence status, and deductions applicable. At Frau Legal, our team of tax lawyers in Mallorca and Ibiza offers comprehensive advice for both residents and non-residents. We assist clients in calculating the correct taxable base, filing tax returns, and claiming refunds for overpaid amounts.
📍 Discover more about our Tax and Fiscal Law services or contact us for personalised advice.
