Over 65s in Spain could save thousands under new property tax rule

Older homeowners in Spain who are forced to leave their family home due to age or dependency may be able to avoid costly capital gains tax under new legislation. The changes, published in Spain's Official State Gazette on October 7, protect the status of a property as a habitual residence for qualifying individuals over 65 years old.

This is particularly beneficial for British and other foreign residents who have owned Spanish property for many years, as it could result in significant savings when the time comes to sell. Under existing Spanish tax rules, homeowners aged 65 or older can exempt capital gains from Spanish personal income tax when selling their habitual residence.

However, complications arise when an older person moves out before selling the property, potentially jeopardizing the tax exemption. The new legislation addresses this issue, providing specific protection for those aged 65 and over, as well as individuals in severe or great dependency who leave their habitual residence due to age or dependency.

This protection applies to people moving into specialized care facilities or the homes of qualifying relatives up to the third degree of blood or marriage. The change can be especially valuable for families who do not want to sell an elderly relative's property immediately after they move out. While the protection does not apply to all older homeowners, it could potentially save thousands of euros for those who have invested significantly in their Spanish property over the years.