April 29, 2025

What expenses are tax-deductible when selling a property?

Whether buying or selling a property, it's important to keep all invoices and receipts related to the transaction. These documents can be presented to the tax authorities when filing your income tax return, allowing you to reduce the capital gains reported in your Personal Income Tax (IRPF). This article summarizes the main expenses that are typically deductible.

What expenses can be deducted when selling a property? In short, only those expenses that are directly related to the purchase and sale of the property can be deducted. We will break down the expenses into two categories: those related to the acquisition value and those related to the transfer value.

Deductible expenses from the acquisition value

These are the costs associated with the original purchase of the property. In addition to the purchase price, there are several related expenses that may be deductible, as they were necessary to complete the transaction. Acquisition Value = Purchase Price + Expenses.

The following are examples of deductible expenses related to the acquisition value:

• Notary fees  
• Administrative agency fees (gestoría)  
• Legal fees  
• Property registration fees  
• Property appraisal costs  
• Property Transfer Tax (Impuesto de Transmisiones Patrimoniales - ITP) or VAT (IVA)  
• Stamp Duty (Actos Jurídicos Documentados - AJD)  
• Costs of improvements or investments made in the property (e.g., energy efficiency upgrades, accessibility improvements, replacement of old installations, installation of telecommunications infrastructure)  
• Any seller-borne expenses that were shared between both parties (e.g., municipal capital gains tax)

Deductible expenses from the transfer value

The transfer value refers to the sale price of the property.  Transfer Value = Sale Price - Expenses.

The following are examples of deductible expenses related to the transfer value:

• Municipal capital gains tax (plusvalía municipal)  
• Mortgage cancellation fees  
• Real estate agency commissions  
• Notary fees  
• Administrative agency fees (gestoría)  
• Legal fees  
• Issuance of energy efficiency certificates, certificates of occupancy, or certificates of outstanding community fees  
• Any buyer-borne expenses that were shared between both parties

Calculating capital gains from the sale of a property

When a property is sold, the financial outcome of the transaction must be reported in the income tax return for the year in which the sale occurred. For example, if the sale took place in 2024, it should be reported in the 2025 tax filing. Capital Gain = Transfer Value - Acquisition Value.

The resulting capital gain is subject to a progressive tax rate, as outlined below:

• Up to €6,000: 19%
• €6,001 to €50,000: 21%
• €50,001 to €200,000: 23%
• Over €200,000: 26%

Source: www.idealista.com