You have made the decision to change floors. You're not alone. Spain is experiencing a resurgence of the housing market, the sale has skyrocketed, leaving behind the crisis in the sector. You will have heard about the huge number of issues on which you should decide: taxes, if you want to sell it yourself or with an agency, the price, the revaluation ... it seems a lot of points to consider.
Today we explain everything you need to know to sell a flat and buy a new one, without paying extra, from taxes to exemptions.
What taxes affect the sale of an apartment to buy another?
After having a buyer and having signed a sales contract, you face the taxes you must pay for receiving the money from the sale.
The big question that many sellers have is what their tax situation would be after selling an apartment, and how they would affect taxes if they want to buy a new apartment with that same money. There are two large taxes, the Sales Tax - which you declare in your fiscal year - and the Municipal Goodwill Tax, which changes according to each municipal authority. Taxes are calculated based on the capital increase in the value of what is sold. That is, the difference between the price at which you bought it and the price at which you sold it.
Now, there are many cases in which you can get exemptions in this tax, to avoid unnecessary payments. Even if you do not get an exemption, there is also the possibility of reducing capital gains taxes. If you sold your apartment to buy another one, the first step is to legally demonstrate that these are your intentions to be able to reinvest the money from the sale in the purchase of your next home.
Points to consider to sell a flat to buy another
To be able to do it, you must first know how to clearly answer the following questions:
Is the apartment you plan to sell or sell your usual home?
The definition of habitual housing is that which has been your residence for a continuous period of at least three years. In the event that your apartment has been recently acquired, you should have inhabited it for at least 12 months.
There are some special considerations to consider a home as usual, not having elapsed the aforementioned three years: if there are situations that require you to change your address, this would be the case if the family has grown; if you are going to marry, or on the contrary, if the separation of marriage has been decided; if you have accepted a job transfer; if you have managed to get your first job, or have changed jobs. If the apartment was your usual home, you may qualify for tax exemptions for the purchase of your next apartment.
What is equity gain? How is it calculated?
The capital gain is the amount on which the tax you should pay is charged. This amount is calculated by applying the difference between the values for which the property is sold and the value for which it was acquired at the time. They also apply an adjustment for coefficients that change from one autonomous community to another. As a taxpayer, you would be obliged to pay as long as you had a capital gain, that is, that you have obtained a benefit from such sale.
What does the reinvestment of habitual housing imply?
If you want to sell an apartment to buy another, this would be your case. Reinvestment means that you allocate all or part of the money you get from the sale of your current apartment to the purchase of your new apartment.
But this is not the only thing. There are a series of mandatory requirements that must be met in order for the exemption of property sales tax to be granted. Specifically, it is necessary to meet the following requirements:
That you are selling your usual home.
That you buy your new habitual home, called reinvestment, before the fulfillment of certain deadlines. Specifically, the term is two years from the sale. If the profit is greater than the amount you reinvest in the purchase of your new apartment, the exemption is partial, that is, it will be taxed on the amount you do not reinvest.
If in the two years prior to the sale of your apartment, you have purchased a new property that is now your usual home, you will not have to pay the Treasury for the benefit obtained from the sale. This is true even if you do not allocate the gain to repay the loan of your new home.
If you have already turned 65, or you are in a situation of severe dependence or great dependence, you will not pay for the capital gain you get from the sale of your usual home. If you are married and only one of the couple is 65 years old, the exemption will only apply to half of the profit made.
There are other taxes on the sale of my apartment, does the exemption for reinvestment in habitual housing also apply?
In addition to the tax on the sale of real estate, you will be subject to payment of the Municipal Goodwill Tax. This tax taxes the increase in the value of urban land (IIVTNU), has a municipal character and depends on the increase in value that the apartment experienced during the time in which you were the owner. Here you can the best property deal at webuyswflhomes.
This increase (or not) of the value is recalculated each time the property is transferred, whether by sale, inheritance or other causes. Unlike what happens with the personal income tax, the reinvestment of habitual housing does not apply as an exemption in the regulatory law of the municipal capital gain and, therefore, the sale operation is subject to the payment of this tax. Regardless of whether you want to reinvest in another apartment, since 2018, new calculations have been applied in the Municipal Goodwill Tax, so maybe you can apply to these exemptions.
When to declare reinvestment in habitual housing?
After establishing whether or not you apply for the exemption benefit, and to what extent, it is time to formalize this in your tax return.
Thus, you must declare your intention to reinvest at the end of the fiscal year in which you sold your apartment. If the reinvestment is not carried out in the same year in which the sale of your apartment occurs, it is mandatory that you state the intention to reinvest in the declaration of the year in which you obtain the profit.
However, the fulfillment of this formal duty is not substantial or mandatory at the time you decide to apply to the exemption of the tax for reinvestment. The important thing is that when you apply to the exemption, there is no inconsistency in the data provided in the statement of that fiscal year or the following.
As you can see, the sale of an apartment is not so complicated, especially if you have the support of experts willing to guide you every step of the way. At Replace we are pleased to help each client reinvest in their future, speeding up the procedures and guaranteeing the best advice. Do you want more information? We are here to help you.