Investment approach
Tax on Flipping Profit: Resident, Non-Resident and SL Compared
Tax on selling a renovated apartment depends on the seller: a resident pays IRPF at 19–30%, a non-resident 19%, an SL 25% on profit. One worked example compares all three.
Tax on selling a renovated apartment in Spain depends on who sells. A resident individual pays IRPF (personal income tax) on the gain at 19–30%, a non-resident pays 19%, and an SL (Spanish limited company) pays corporate income tax at the general rate of 25%. The gain is the sale price minus the seller's costs minus the acquisition cost, including ITP (transfer tax) and renovation. Below is a calculation on one example, and the points where flipping stops being an ordinary sale.
How the gain is calculated
For an individual, art. 35 Ley 35/2006 applies. The acquisition cost is made up of the purchase price, improvement costs and taxes tied to the purchase, and loan interest is expressly excluded. The seller's transaction costs are deducted from the sale price (art. 35 LIRPF). So ITP, notary, registry and renovation invoices reduce the gain, while interest on a mortgage taken for the renovation does not. A non-resident calculates the gain by the same rules (art. 24.4 TRLIRNR).
For an SL, the tax base starts from the accounting result. A flat bought for resale is carried there as inventory, and ITP, renovation and upkeep go into its cost or expenses. Net financial expenses are deductible up to 30% of operating profit, and up to 1 M€ a year is deductible in any case (art. 16 LIS).
Comparison by seller status
| Resident, individual | Non-resident, individual | SL | |
|---|---|---|---|
| Tax | IRPF, base del ahorro (savings income base) | IRNR (non-resident income tax) | Impuesto sobre Sociedades (corporate income tax) |
| Rate | 19–30% | 19% | 25% general rate |
| Legal basis | art. 46, 66 LIRPF | art. 25.1.f TRLIRNR | art. 29 LIS |
| Deadline | Annual return | The buyer pays the 3% within a month; the tax is settled within three months after that deadline | Return within 25 days after the six months following the period end |
| Second layer | None | None | Dividend tax when cash is paid out |
On the non-resident: the buyer withholds 3% of the price and pays it within a month of the transaction, and the seller files the final tax within three months after that deadline, crediting the withholding (art. 14 Reglamento IRNR). If the withholding exceeds the tax, the excess is refunded.
Worked example: one flip, three sellers
A worked example, not a forecast and not a DNPI project. A flat is bought for €400,000, ITP €40,000, notary and registry €6,000 (assumption), renovation €70,000 (assumption), sold for €700,000, seller's transaction costs €20,000 (assumption).
Gain: 700,000 − 20,000 − (400,000 + 40,000 + 6,000 + 70,000) = €164,000.
| Seller | Tax on the gain | Share of the gain |
|---|---|---|
| Resident, individual, no other income | €36,600 | 22.3% |
| Non-resident, individual | €31,160 | 19% |
| SL, corporate tax 25% | €41,000 | 25% |
| SL, then a dividend to a non-resident at 19% | €41,000 + €23,370 = €64,370 | 39.25% |
For the resident I applied the ahorro scale of 19% up to €6,000, 21% up to €50,000 and 23% up to €200,000, ignoring the personal allowance: the state scale of 9.5–15% (art. 66 LIRPF) plus the regional part, which the same scale sets by default (art. 76 LIRPF, AEAT, regional rate). Check the final rates with an asesor fiscal (tax adviser). For the SL the general rate is used. For periods starting in 2026, companies with turnover below 10 M€ in the previous period pay 23%, those below 1 M€ pay on a scale of 19% and 21%, and a new company pays 15% in its first two periods with a positive base; none of the reduced rates applies to an entidad patrimonial (asset-holding company) (art. 29 and disposición transitoria 44 LIS). The calculation leaves out plusvalía municipal (municipal tax on the increase in land value), IBI (annual property tax), interest and running costs.
The SL does not look cheaper in this table. Its strength is elsewhere: losses and expenses run through the books, and the money can stay in the company for the next project. Paying cash out to the owner is taxed separately, as covered in the article on SL taxes.
When flipping stops being an ordinary sale
The law treats income as economic activity if a person organises the means of production and people themselves in order to take part in producing or distributing goods or services (art. 27.1 LIRPF). The law gives no number for how many deals, or what organisation of work, turns a series of sales into an activity. In that case the income goes into the general base on a progressive scale. In Catalonia, under the regional scale in force since 2025, the top combined rate is 50%: 24.5% state (art. 63 LIRPF) and 25.5% regional (Hacienda). For an investor who bought one flat and sold it, this risk is small. For someone doing several flips a year, it is a question for the asesor fiscal before the second deal.
A sale by a company also moves into a different regime for IVA (VAT). The second and any later transfer of a home is exempt from IVA, and the buyer pays ITP. But if the renovation meets the definition of rehabilitación (more than 50% of the project cost goes on structure, façades, roofing or similar and related works, and the total cost exceeds 25% of the purchase price excluding land, if the purchase was within two years before the works began, otherwise 25% of the market value of the building excluding land when the works began), the sale counts as a first transfer and IVA of 10% applies (art. 20.Uno.22 and 91 LIVA). This is covered separately in the article on IVA in a project.
Who this calculation is not for
If you pay taxes in a country with a double taxation treaty, the gain may also be taxed at home: then what matters is the credit, not just the Spanish rate (double taxation treaties). The calculation also does not work for projects with several owners, sales in parts and purchases through a power of attorney: those need an individual review. The economics of the deal itself and the timing of the sale are covered in the article on the economics of renovating and reselling.
Questions for the asesor fiscal before buying: in what status will you sell, how will the tax be credited in your country of residence, whether a series of deals creates an activity, and how to account for the renovation and the interest.
Questions and answers
Can the tax be reduced by the renovation cost?
Yes, if the costs are backed by invoices: for an individual they enter the acquisition cost as improvements (art. 35 LIRPF), and for an SL they run through cost of sales. The tax authority may reject costs without invoices.
Who pays plusvalía municipal on a sale?
The seller. If the seller is a non-resident individual, the buyer acts as sujeto pasivo sustituto (substitute taxpayer), meaning the tax is processed through the buyer (art. 106 TRLRHL). The detailed calculation is in the article on plusvalía municipal.
What if the sale produces a loss?
How a loss is offset depends on status and other income. This is a question for the asesor fiscal, and the article gives no general answer.
Is the sale of a renovated apartment subject to IVA?
Usually not: it is a second transfer of a home, which is exempt, and the buyer pays ITP. The exception is a deep rehabilitación, when the conditions of art. 20.Uno.22.B LIVA are met.
