Capital gains (plusvalía patrimonial) refer to the actual profit made when selling a property, calculated by subtracting the original purchase price (plus associated costs) from the sale price. For example, if you bought a house for €150,000 ten years ago and now sell it for €200,000 (with €10,000 spent on taxes and notary fees), your capital gains would be €40,000.
These gains must be declared to the Spanish tax authorities (Hacienda) in the following year’s income tax return so that the corresponding Income Tax (IRPF) can be calculated, which is charged at a rate of 19% or 28%, depending on the tax bracket.
There are certain exemptions from income tax on capital gains, for example, if the seller is over 65 years old (and the property is their main residence), or if the seller reinvests the proceeds in a new main residence. However, it is advisable to consult a tax advisor for personalised advice.
