Plus Valia tax for residents and non-residents
Regardless of your residential status in Lanzarote, you’ll pay the Plus Valia tax, which is based on the increase in land value since you purchased the property.
The tax is payable to the local town hall within 30 days of completing the sale of the property and is calculated on the cadastral value as well as the number of years you’ve owned for. The cadastral value is usually lower than the market value and is found on the latest IBI receipt you paid.
If you’re a non-resident selling a property, the buyer can insist on withholding funds to pay the Plus Valia on your behalf. This is because under Spanish law, any debts against the property are passed on to the new owner and as a non-resident, you could potentially skip the island without paying.
Captial gains tax after selling your property
Everyone has to pay capital gains tax on the profits made once they’ve sold their property. However, there are a few exemptions if you’re selling your main home as a Lanzarote resident.
As a resident, if you reinvest the profit in another primary home within two years, you can claim a full or part exemption depending on how much you reinvested.
If you’re over the age of 65, you can also claim 100% exemption as long as you state that the property was your main residence in the deed of sale.
Both residents and non-residents can offset expenses related to the purchase and sale of the property, for example, notary and lawyer fees, as well as any expenses incurred extending the building as long as you have official invoices.
The percentage of tax varies depending on the profits made from the sale.
For a capital gain from € 0 to € 6,000 the rate is 19%.
For a capital gain between € 6,001 and € 50,000, the rate is 21%.
On a capital gain from € 50,001 to € 200,000 23% is charged.
For a capital gain from € 200,000 you’re taxed at 26%.
Tax retention for non-residents
As a non-resident, the lawyer handling the purchase of the property will usually retain 3% of the purchase price which will be paid to the Spanish tax office within one month of the sale. You will then need to submit a balancing tax return for the remaining amount due. If the tax liability is lower than the amount retained, you’ll be issued a refund.
Other taxes
In order to complete the sale, you’ll have to show proof that your local taxes, the IBI (local council tax) and basura (rubbish collection tax) have been paid up to date.
If you’re a non-resident selling your property, you’ll still have to complete the “non-residents tax” the following year for the amount of time you still owned the property in the year of sale.
