SELLER EXPENSES
GUIDE TO EXPENSES WHEN SELLING YOUR HOME
Expenses before selling a property
Before starting the sale of a property, there are a series of expenses you must consider, some are mandatory and others are not, but it is important that you know them all.
The habitability certificate
Although it is not essential to have it from day one, we always recommend starting the procedures to obtain it as soon as possible. You may already have it. In that case, you just need to check that it is not expired. Remember that the certificate of habitability must be renewed every 15 years. If you do not have it, processing it may take several days and you will not be able to sell your house without it.
The cost of the habitability certificate depends, among other things, on the size of the property.
If you want to obtain the certificate of habitability in Málaga, at AYRE Estates we work from 90 euros plus VAT and fees (15.27 euros).
The energy certificate
The function of the energy efficiency certificate (CEE) is to inform about the efficiency and levels of energy consumption of a property. Up to this point, I'm sure I'm not revealing anything new to you.
What you may not know is that since 2013, it is mandatory to have it at the moment you announce your home for sale or rent.
Obtaining the energy efficiency certificate involves a series of procedures and may take a few weeks. Therefore, you should process it before starting the sale.
And what cost does it have?
It will depend on the size of the home and the architect's fees. At AYRE Estates we also do energy certificates. Consult us to get yours done.
The Simple Note
The informative Simple Note is one of those expenses that are not mandatory, although highly recommended. It is a public document issued by the Property Registry, which certifies ownership, description, and encumbrances of a property. It is recommended for the following reasons.
First of all, by showing this document to interested parties in your property, you generate trust. They will be able to confirm that you are indeed the owner of the property you are selling, and if there are any encumbrances or liens on it.
Secondly, because you will also be able to check the status of your property according to the registry and, if you detect any problems, you will have time to solve them.
You can request a Simple Note online for about €10 or €20, and request it online at most Property Registries.
Real estate advertising: professional photographer, Home Staging, and the advance real estate commission.
This section is an optional expense; we could say it is an "investment" to sell your property faster and better, and it consists of preparing your home for sale. It is not mandatory, but taking care of the staging (Home Staging) and using professional photographs in your ads are ways to sell at a better price and in less time.
The price of a Home Staging service can range between 500 and 2,000 euros, and a professional photo shoot usually costs around 120 or 150 euros.
Finally, some real estate agencies offer the possibility of paying their fees in advance.
You may be wondering what advantage there is to doing it this way. The answer is that this formula can mean savings of up to 60% in some cases. However, it is only advisable to do so if you trust the real estate agency.
3-bedroom apartment on Calle Larios
Expenses during the sale of your house
Let's now look at what expenses and taxes may arise from the moment you start selling your home until the signing of the Public Deed.
Property Tax (IBI)
The IBI, Property Tax, is the direct tax that levies the ownership of a property once registered in the land registry. It is a municipal tax managed by the municipalities, and it is paid annually.
Do you have to pay IBI when selling your apartment?
The regulations are clear on this. The owner of a property must take care of the IBI corresponding to the current year. I will give you an example.
Let's assume you put your apartment up for sale on November 25, 2019, but it takes 2 months until you find a buyer.
You sign the purchase deed on January 15, 2020. What IBI do you have to pay?
Since you have been the owner of the property during 2019, but also in 2020, you are responsible for the payment for both years.
In some cases, and only if both parties agree, a different formula can be negotiated with the buyers, although this is not common.
Remember that on the day of the signing of the Public Deed, you must present the last IBI receipt as proof of being up to date with this tax payment.
Management fees for drafting contracts
You may have decided to sell your apartment as an individual. In that case, it is advisable to have the help of a specialized management company or a law firm for the drafting of documents and contracts.
If, on the other hand, you hire a real estate agency, the contract drafting service is usually included and you will not have to pay anything additional.
The reservation document, the purchase contract, or the earnest money contract are just some examples of documents that a professional should review before signing them.
This type of document involves money transfers and other important commitments. If you make mistakes in the drafting or include incomplete clauses, you will be jeopardizing the sale of your house.
The price for drafting a document or contract will depend on each management office.
Advice:
Whenever possible, collaborate with a manager or lawyer from your area. When the time comes to sign any document with the buying party, you can do it in their office, fostering an atmosphere of trust and professionalism.
seller expenses simulator
Mortgage cancellation and management process
One of the most common burdens when selling a property is an unpaid mortgage.
You might say: “But I finished paying my mortgage years ago. Why does it still appear as a charge in the Property Registry?”
And here we come to the heart of the matter.
Years ago, when you took out the mortgage to buy your house, you had to register it in that registry and even if you have paid every last euro, the mortgage remains registered. So to remove the burden, you will also need to cancel it in the Property Registry.
How you do it will determine the final cost. You can do it yourself, hire the services of a management company, or ask your bank to handle the process. Doing it yourself is the most economical option. However, it will take time and patience.
The first step is to request a zero balance certificate from your bank. Although according to the Bank of Spain this procedure should be free, we have seen cases where the bank has charged up to 100 euros for it.
With this document, you (or the manager) and a representative of the bank must sign the loan cancellation before a Notary.
It is possible that the bank wants to charge for that trip. You should know that according to the Bank of Spain, that "fee" is also not applicable.
Subsequently, it is your obligation to request the model 600 from the Tax Agency regarding Documented Legal Acts (AJD). You should not worry. This process is exempt from AJD. But you need to submit the model.
Finally, with all the documentation, it's time to go to the Registry and request the cancellation registration.
The expense generated by all these procedures, depending on whether you do them yourself or through a management company, can reach up to 600 euros.
Note:
With the new reform of the Mortgage Law of 2019, the fees for canceling a mortgage before the agreed term with the bank have been modified as follows:
In the case of withdrawal fees, the bank may choose between the following options:
During the first five years of the mortgage, the limit to apply will be 0.15%.
During the first three years, the cap will be 0.25%.
In the case of interest rate risk fees, the limits will be set at:
2% for the first 10 years.
1.5% starting from the eleventh year.
Remember that although both expenses are legal, they must be included in the contract with the bank and you should have been informed at the time of signing.
Community Certificate
At this point, I am sure you understand the need to prove that all payments related to your home are up to date. That is why this document is mandatory when selling, and the Notary will require it on the day of the Public Deed.
Community expenses are important. And I am not only referring to the fee you pay monthly. Special assessments can lead to astronomical disbursements, depending on their purpose.
The community certificate serves to certify that you are up to date with the payments corresponding to the maintenance of the building. It must be signed by the Community Administrator or, failing that, the President.
Keep in mind that the administrator may take time to draft it, so it is good to request it at least 10 days before the signing.
Once drafted, its validity is about 15 days and the price will depend on your administrator's rates.
Real estate advertising
Continuing with the idea of selling as a private individual, you will need to advertise your home if you want to find a buyer. You have many options, from doing it the traditional way with posters and flyers, to using the internet and real estate portals like Idealista or Fotocasa. If you have ever visited these portals, you will know that as a private individual you have the possibility to publish an ad for your home for free. But for potential buyers to see your home, you need to appear at least among the top 20 positions.
Real estate agencies spend thousands of euros a month to ensure that their clients' apartments are visible, so it won't be easy.
But let's be optimistic. You can try and check the results.
Expenses and taxes after selling
Once the sale is signed in the Public Deed and the check has been cashed, it seems that everything is over. But our long history of payments continues. What comes next?
Home sale expenses
Real estate commission
If you have sold your home with a real estate agency, you may have to pay their fees. And I say "may" because this situation does not always occur in the same way. Some real estate agencies charge before starting, others bill their fees once the earnest money contract is signed, and the rest charge part (approximately 50%) in earnest money and the rest in Public Deed.
If this is your case, once the signing before the Notary is concluded, the representative of the real estate agency will present you with their invoice for fees.
It is usual to have the check prepared and deliver it on the same day.
I will not go into detail on this topic, as there is no regulation on the commission that a real estate agency should charge, although it is usually around 3% of the final sale price.
State capital gains tax, capital gain, and IRPF
This is perhaps, along with the Municipal Plusvalía, one of the most relevant taxes when selling a property. To leave no doubt about it, I will start by defining some important concepts.
The State Plusvalía
In real estate terms, when we talk about capital gains, we refer to the increase in the value of an asset, whether it is land or a property.
The simplest definition of state capital gains or capital gain is the profit we have obtained by selling our property at a price higher than what we bought it for.
Income Tax
The personal income tax is the tax that levies our capital gains (assuming that the ownership of the sold property is an individual person)
General taxable base
We define the taxable base as the amount on which the taxes we are going to pay are calculated.
For example, in any invoice, the tax base is the price of the product or service contracted, before applying VAT and other taxes.
Taxable base of savings
It integrates the capital gains or losses derived from transfers, such as the sale of a property.
Acquisition value and transfer value
Finally, to calculate our gain, it is essential to know the real acquisition value, that is, the total value for which we acquired the asset, and the transmission value or sale value.
You can calculate the acquisition value by applying a simple formula.
Acquisition value = (Acquisition amount + cost of renovations and improvements + expenses and taxes) – amortizations
With all these concepts clear, it seems quite simple to know if we have to pay IRPF.
If you have owned the property for more than 1 year and sell for an amount greater than the acquisition value, you will undoubtedly have to account for the gain.
And how much will you pay?
19% for gains of up to 6,000 euros.
21% for gains between 6,000 and 50,000 euros.
23% for gains over 50,000 euros.
Exemptions in IRPF
You have sold your house, you have the money in your account, and you are ready to enjoy it. Then this tax comes along and takes the smile off your face. Don't worry. The tax office tightens, but it doesn't suffocate. And this tax seems designed to curb certain speculative interests.
Most taxpayers, at least those who do not usually do business with their properties, can take advantage of the following tax exemptions:
Reinvestment in primary residence
You will not pay IRPF if the property you sold is your primary residence, if you allocate the profits to the purchase of a new primary residence, and if you do so within 2 years from the date of transfer.
Do you meet the 3 requirements? If the answer is YES, congratulations. Your expense for income tax will be zero.
– Mayores de 65 años
You have been working your whole life, now it's time to enjoy. You decide to sell your apartment and move permanently to the village, or better yet, why not pack your bags and start that trip you've always dreamed of? The best part is that because you are over 65 years old, the tax office will not ask you to pay for your gains from the sale.
That's right. To benefit from the 100% exemption, the sold property must be your primary residence, and all owners must be over 65 years old.
Over 65 years old (sale of non-primary residence)
In the event that the sold property is not your primary residence, you can benefit from this exception as long as you reinvest the profits by contracting a life annuity plan.
Dation in payment
An unpleasant situation, but also anticipated by the Tax Agency. Cases of dation in payment are exempt from taxation, as no gain is expected.
Note:
IRPF also taxes donations. Both the owner and the taxpayer must pay tax on the gain obtained.
Can you pay less IRPF?
If you haven't been able to take advantage of any of the previous exemptions, don't throw in the towel. I will explain what the abatement coefficient is and whether it can help you pay less IRPF on the profits obtained from the sale of your home.
The reduction coefficient is a reducing coefficient that you can apply to your income tax, as long as you purchased it before December 31, 1994, and the transmission value does not exceed 400,000 euros.
It is calculated by subtracting 11.11% of the capital gain for each year that has passed since December 31, 1994, until January 19, 2006.
The calculation is a bit complex. That's why I went to the Tax Agency, and they provided me with an example of a real operation.
Example extracted from the website of the Tax Agency
"Transfer of a property on December 31, 2015, for an amount of 300,000 euros, acquired on January 1, 1991, for an equivalent amount of 100,000 euros. The taxpayer previously transferred, on February 1, 2015, another asset (whose transfer value was 200,000 euros), to which the transitional regime was applied."
Income tax on the sale of a property
Municipal capital gains tax or tax on the Increase in Value of Urban Land (IIVTNU)
The land on which your house is built may also have increased in value.
This increase is known as municipal capital gains or IIVTNU and taxes the increase in the value of urban land. The municipal capital gains tax is managed by the municipality, it is only paid when the transfer of a property occurs and generates revenues of more than 2 billion euros, just in 2018.
When is it paid?
The municipal capital gains tax is paid every time a property is transferred, whether due to a sale, inheritance, or donation.
Where is it paid?
The municipal capital gains tax or IIVTNU is the responsibility of the municipality, so it will be the administration that designates a procedure and a space to make the payment.
In municipalities like Madrid or Barcelona, payment is made through self-assessment.
Who pays the capital gains tax?
As a general rule, it will be the seller who assumes the cost of the capital gains tax, unless they are not a resident in Spain, in which case the buyer will pay it.
If the transfer occurs due to inheritance or donation, the beneficiary of the transferred assets will be the one who pays the tax.
How to calculate the capital gains tax?
The answer is not straightforward, as each municipality applies its own coefficients resulting in different outcomes depending on your place of residence.
Below, you will find the correct formula to calculate how much the municipal capital gains tax will cost you.
But for it to work, you need to know the land value, the full years elapsed since the acquisition of the property, the tax base, the regulatory coefficient, and the tax rate.
FORMULA
Land value: you will find this value on your IBI receipt.
Complete years x Regulatory coefficient = Increase per year (%)
Land value x Increase by years = Tax base
PLUSVALÍA = Tax base x Tax rate (according to ordinance)
You can calculate the Municipal Capital Gains Tax from here
Costs for selling an apartment in Málaga (real example)
A good way to summarize everything we have seen in this article is to represent each of the expenses for selling a property in a real example.
To do this, we will use a real case:
Daniel bought his apartment in 2002 in Málaga for €120,000 and requested a mortgage of €100,000 from his bank to finance the purchase.
At the end of 2018, Daniel sold his apartment in Málaga for 180,000 euros, intending not to reinvest his profits in another home, when he still had 30,000 euros left to pay.
Let's see what expenses the sale of your house has generated:
Certificate of habitability and Energy efficiency certificate: 200 €.
Simple Note: 20 €
IBI: 400 euros corresponding to 2019 (at the time of sale at the end of the year, it had already been paid, so we will include it as an expense in the final account)
Mortgage cancellation: Daniel has 30,000 euros pending, so the bank applies the agreed commission for cancellation of 1%, which amounts to 300 € (currently banks do not include this commission in the signing of mortgages). If the seller does not carry out this procedure on their own and decides to delegate it to the bank's management company, it will cost around another 300 €.
Cancellation of the mortgage registration: since you are still in debt with the bank, obviously, the cancellation of the mortgage registration has not occurred, which will mean around another 1000 €.
Community Certificate: No community fees
Real estate commission: generally 3% of the sale price, €5,400 + VAT = €6,534
IRPF: the gain is €60,000 (€180,000 from sale minus €120,000 from purchase). A rate of 23% is applied to the gain. Therefore, you will pay €13,800 in the IRPF tax. However, if you choose to reinvest that €60,000 gain in another primary residence within two years, you will be exempt from this tax.
Municipal plusvalía: let's assume the cadastral value of the land is €40,000. Entering this amount into the previous municipal plusvalía simulator, the resulting fee is €5,568.
Total expense for selling a property: €27,722
Conclusions on the costs of selling a property
As you can see, calculating the costs of selling your home is not easy. But it will help you know in advance what money you will actually have at the end of the process.
If there is one thing we have learned as professionals over the years, it is that it is better to avoid surprises during the sale of a property.
At AYRE Estates we know how important your property is to you. That’s why we take care of every detail so you can sell at the best price, in less time and with all guarantees.
If you are thinking of selling your house and need help, at AYRE Estates your Real Estate Agency in Málaga we can assist you: call us or send us an email at: contacto@ayreestates.es for information.
The content of this guide is for informational purposes only; it is subject to possible errors, omissions, or changes and should not be considered a substitute for professional legal and/or tax advice. Accuracy is not guaranteed.
