If you are over 65 and considering selling your home, there is excellent news: you may be fully exempt from paying tax on the capital gain. Spanish tax legislation includes specific benefits for people over 65 that many are simply unaware of.
Exemption on the sale of your main residence
The Spanish Income Tax Act (IRPF) establishes that people over 65 are fully exempt from paying tax on any capital gain arising from the sale of their main residence. This means that if you bought your home decades ago for a fraction of its current value, you will not pay a single euro in tax on that difference.
Requirements for the exemption
- Age: you must be 65 or over at the time of the sale
- Main residence: the property must have been your habitual residence for at least the last 3 years
- Ownership: if the property is jointly owned by spouses, it is sufficient for one of them to meet the age requirement
What if it is not your main residence?
If you sell a property that is not your main residence (a second home, a commercial premises, or an independent parking space), you may still benefit from the exemption, but on one condition: you must reinvest the proceeds into a lifetime annuity within a maximum period of 6 months from the date of sale.
The maximum amount that can be invested in such a lifetime annuity whilst qualifying for the exemption is 240,000 euros. Payments from the annuity must begin within a maximum of one year from the date it is set up.
Special circumstances
People in a situation of dependency
People assessed as severely or greatly dependent who need to move into a care home may also qualify for the exemption, provided the property was their habitual residence up until the move.
Sale of bare ownership
If you sell the bare ownership of your main residence whilst retaining the right of usufruct (meaning you continue to live there), you may also benefit from the over-65 tax exemption.
A practical example
Imagine that María, aged 68, bought her flat in Barcelona in 1990 for 60,000 euros and is now selling it for 350,000 euros. The capital gain would be 290,000 euros. Without the exemption, María would have to pay between 19% and 28% of that gain in income tax (between 55,100 and 81,200 euros). Thanks to the over-65 exemption, she will pay nothing at all.
Advice from Fincas Caseuro
- Always consult a tax adviser before proceeding with the sale
- Make sure you can prove the property was your main residence (official registration, utility bills in your name)
- If you plan to reinvest in a lifetime annuity, compare offers from different providers
- Plan the timing of the sale in line with your overall tax position
At Fincas Caseuro we guide you through every step of the selling process and connect you with the best tax advisers, so you can make the most of every benefit available to you. Contact us with no obligation.