The Tax Agency (AEAT) has issued a statement warning homeowners about their tax obligations at the end of the process of selling their properties. According to the AEAT, there are three taxes that sellers must pay.
The first of these is the well-known Property Tax (IBI), which is divided proportionally between buyer and seller depending on the time each has owned the property. The second tax is the municipal capital gains tax, which must be paid within 30 working days of the sale of the property. Finally, sellers must also take into account the Personal Income Tax (IRPF), in which they must report possible capital gains in their next Income Tax Return.
NOTICE TO HOMEOWNERS
However, there are situations in which taxpayers can benefit from the sale of their home and be exempt from paying personal income tax. Among them are those over 65 years of age and people in a situation of dependency, who are not required to declare capital gains. Also included are those who reinvest the money from the sale into the purchase of another home within two years before or after the transaction.
As for this option, both the property purchased and the one sold must meet the condition of being a primary residence, and the seller must have resided in the property sold for at least three years. In the event that no capital gains have been obtained from the sale of the property, it will not be necessary to declare it in the Personal Income Tax. In addition, there are other ways to obtain exemption from the payment of personal income tax, such as dation in payment or reinvestment in primary residence.
In the case of dation in payment, both the insolvency situation and the lack of other assets must be demonstrated in the Declaration. On the other hand, if the transfer of the main residence with reinvestment occurs, it is necessary to express the willingness to take advantage of this option and ensure that the transferred and/or refurbished home meet the requirements to be considered the main residence.
The Tax Agency has also provided clarification on its website on reinvestment in a primary residence: “In the event that the amount of the reinvestment is less than the total obtained in the disposal, only the proportional part of the capital gain that corresponds to the amount effectively reinvested under the conditions mentioned above will be excluded from the tax”.
In addition, it is important to take into account the corresponding boxes in the Income Tax Return.
According to the Organization of Consumers and Users (OCU), in 2022, box 1626 is the place where the cadastral reference must be included in the event that there are economic activities dependent on the transferred domiciles and these are accessory to the habitual residence.
Taxpayers must be aware of their tax obligations when selling a home, including the proportional payment of IBI, municipal capital gains and the declaration of possible capital gains in personal income tax. However, there are specific cases in which an exemption from paying personal income tax can be obtained, such as in the case of people over 65 years of age, people in a situation of dependency or those who reinvest the money in the purchase of another habitual residence. It is essential to find out about the requirements and correctly fill in the corresponding boxes in the Income Tax Return.
Ask us if you are thinking of selling your property, we are at Carrer Tuset 16 Local 8 in Barcelona and at Carrer Pou Fondo 1 in Manacor (Mallorca)
