How Much Money Will I Actually Keep After Selling My Property in Tenerife?
One of the most common questions property owners ask is: how much money will I actually receive after the sale?
The answer depends on several factors, including the original purchase price, the selling price, documented improvements, tax residency and the municipality in which the property is located.
Typical Taxes and Costs When Selling Property in Tenerife
Capital Gains Tax
When a property is sold in Spain, any taxable capital gain may be subject to taxation.
The gain is generally calculated as the difference between the acquisition value and the disposal value, taking into account certain deductible costs and expenses.
Potential deductible items may include:
- Notary and Land Registry fees paid when purchasing
- Transfer Tax (ITP) or VAT paid on acquisition
- Documented property improvements
- Real estate agency fees
- Municipal Capital Gains Tax (Plusvalía Municipal)
3% Withholding for Non-Residents
When the seller is not a Spanish tax resident, the buyer is legally required to withhold 3% of the purchase price and pay it directly to the Spanish Tax Authority.
This is not an additional tax. It is an advance payment towards the seller’s final tax liability.
Municipal Capital Gains Tax
Plusvalía Municipal is a local tax based on the increase in the cadastral value of the land during the ownership period.
The amount varies depending on the municipality, cadastral value and ownership duration.
Real Estate Agency Fees
Agency commissions commonly range between 3% and 5% of the sale price, plus applicable IGIC where relevant.
Mortgage Cancellation Costs
If a mortgage remains outstanding, it must usually be settled and cancelled as part of the sale process.
Community Fees and Property Tax
All community charges and annual property tax (IBI) should be up to date before completion.
Example
A property purchased for €150,000 and later sold for €280,000 may generate a significant capital gain.
However, the final net proceeds will depend on deductible expenses, documented improvements, tax residency status and other individual circumstances.
For this reason, a personalised calculation is recommended before setting an asking price or accepting an offer.
Frequently Asked Questions
Do I have to pay tax when selling property in Tenerife?
In most cases, yes. Tax liability depends on the gain realised and the seller’s individual tax circumstances.
Is the 3% withholding an additional tax?
No. It is credited against the seller’s final tax calculation.
Can I reduce my taxable gain?
Certain documented costs and improvements may be deductible.
Do I also need to declare the sale in my home country?
Possibly. This depends on the tax laws of your country of residence and any applicable double taxation agreements.
How can I estimate my net proceeds?
The most reliable approach is to obtain a personalised calculation based on your purchase documents and tax situation.
Legal Disclaimer: The information provided in this article is for general informational purposes only and does not constitute tax or legal advice. Every property transaction should be assessed individually.