BUYING A HOUSE FROM A NON-RESIDENT

  If you are non- resident in Spain, you pay a flat 35% tax on capital gains. The person who purchases the property, even if he/ she is resident or not, is obliged to withhold and pay to the Treasury 5% of the agreed price. This payment is to be considered in the case of the vendor, as an advance payment of the tax corresponding to the transaction. Therefore, the purchaser has to forward to the non-resident vendor a copy of form 211 that has been used for the payment of the withholding in order for the vendor to be able to deduct this amount from the tax due to be paid, as a result of the assessment of the capital gain. If the amount withheld exceeds the tax due, the vendor may request a tax-refund.
Nevertheless, if the date of the acquisition of the property or the latest improvements (refurbishment) was since December 31, 1996 and ten or more years have passed, no capital gain should be considered. Therefore, it isn’t necessary to withhold and pay 5% of the price of the transaction. In this case it is necessary to draw up a public document declaration stating that no refurbishment has been carried out.
In case that the withholding is not paid, the property tax will be due.
· The Tax form to be used is form 212 in the case of a property to be sold, that is co-
       owned by a non-resident married couple otherwise a single tax-assessment may be  
        filed.
· Filing period: Three months after the end of the deadline of the period for payment  
        of the withholding. The purchaser has to make the payment of the withholding no 
        later than one month after the date of sale.
· Filing place: At the District or Local Office corresponding to the location of the
       property.

Tax rate: 35%


Tax-refund of the excess withheld: In case of capital losses or in case that the withholding exceeds the tax due, it is your right to receive a tax refund of the excess withheld. The refund procedure starts with the presentation of a 212 form at the District or Local Office indicated. The refund will be forwarded by means of a bank transfer to the account stated in the return. The account holder has to be the taxpayer or representative. In the latter case, the representative has to be lawfully entitled to receive the payment. In case that there is no bank account open in Spain, a cheque payment may be requested. In any event, the 211 form filed with the withholding payment has to be attached to the 212 form for non-residents.
The Tax Administration is obliged to carry out a provisional settlement within six months following the deadline established for the filing period of form 212. If the provisional settlement has not been performed within this period, the Tax Administration will forward the excess of the self-assessed tax due. Once six months have passed, without having ordered the refund, due to reasons attributed to the Tax Administration, interest rates on the amount pending payment will be paid.
It is important for you to have copies of both your purchasing and sales escrituras, as well as a carbon copy of form 211 that the buyer used for paying in the retention. It may take some time before the money is returned
NB: Make sure that the buyer really makes the 211 or you as the vendor may not present the 210.
 
©Gonzalo Blanco 2006
 

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