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REAL ESTATE

WHAT ARE THE EXPENSES RELATED TO BUYING A PROPERTY IN SPAIN?

NEW HOUSE

  • 10% VAT (Impuesto al Valor Anadido).
  • 1,5% IAJD (Impuesto Actos juridicos documentados)
  • Property’s Land Registry Office: Registration of the property varies according to the property price and locality: 400-800€
  • Public Notary’s fees: 450-750€, depends on property price.

Generally speaking it would be fair to say that between both (Registry Office and Notary) the costs are around 1,5% of the property price.

SECOND HAND PROPERTY

  • Transfer tax (Impuesto Transmisiones Patrimoniales), which depends on the Autonomous Community where the property is located.
  • Property’s Land Registry Office: Registration of the property varies according to the property price and locality: 300-600€.
  • Public Notary’s fees: 350-650€, depends on property price.
  • Generally speaking it would be fair to say that between both (Registry Office and Notary) the costs are around 1,5% of the property price.
REAL ESTATE

WHAT ARE THE COSTS OF HAVING A PROPERTY IN SPAIN?

Property tax (Impuesto de Bienes Inmuebles), which is paid quartely to the City Hall (Ayuntamiento) based on the cadastral value: (Less than 1%)

REAL ESTATE

DOES HAVING A PROPERTY IN SPAIN GIVE FOREIGNERS THE RIGHT TO GET A RESIDENCE PERMIT?

No, however if you have sufficient economic means, you could be entitled to apply for a non-profit residence permit. Though thanks to the Golden Visa, you could obtain the Spanish residency for an investment of 500.000 EUR in real estate.

Transfer tax (Impuesto Transmisiones Patrimoniales), which depends on the Autonomous Community where the property is located.

REAL ESTATE

WHAT IS THE APPLICABLE TAX RATE FOR THE INCOME I MAKE ON THE PROPERTY?

RESIDENT

Taxed according to the total income made in the year.

NON RESIDENT

If you rent the property, its 24,75% income tax.

If you do not rent the property, then you ought to pay a 24,75% of a 2% of the cadastral value.

REAL ESTATE

DOES THE BUYER HAVE ANY SPECIAL OBLIGATIONS?

It is important to note that the purchaser, resident or not, is obliged to withhold from the Non-Resident vendor 3% of the sales price, this amount to be deposited with the Tax Authorities on behalf of the vendor’s capital gains tax liability.

This amount must be paid within 30 days of the sale taking place. The Tax Authorities will deduct this amount automatically from the vendor’s actual capital gains tax liability.

REAL ESTATE

DOES THE BUYER HAVE ANY SPECIAL OBLIGATIONS?

It is important to note that the purchaser, resident or not, is obliged to withhold from the Non-Resident vendor 3% of the sales price, this amount to be deposited with the Tax Authorities on behalf of the vendor’s capital gains tax liability.

This amount must be paid within 30 days of the sale taking place. The Tax Authorities will deduct this amount automatically from the vendor’s actual capital gains tax liability.

REAL ESTATE

WHAT ARE THE TAXES WHEN SELLING THE PROPERTY?

If a capital gain is made as a result of the sale of a Spanish property, then this will be subject to taxation in Spain at an 18%.

How is it calculated?

In principle, a capital gain is determined by first calculating the “purchase value” of the property (original purchase price to which are added the directly related taxes and costs), and the “sales value” (sales price from which are deducted the directly related taxes and costs, including legal fees and estate agent’s fees).

Then, the amount of the “purchase value” is deducted from the “sales value” to give you the capital gain. This resulting capital gain, which is then subject to taxation, can then be reduced even further by the following:

  • Adjusting the amount by applying an inflationary co-efficient which is updated on an annual basis by the General Budget. The coefficient depends on the year of purchase. It is important to note that an inflationary co-efficient can only be applied if the property was purchased at least one year prior to the sales date.
  • If the property has been rented, the purchase value could be reduced by the amortization corresponding to the rental period. The amortization is also adjusted by relevant coefficients.
  • The final adjusted capital gains tax amount is then taxed at the flat rate of 18%.
REAL ESTATE

WHAT IS THE PURPOSE OF A NOTARY IN SPAIN?

It is incredibly important to make sure you don’t confuse a solicitor, employed by you alone to protect your interests, with a notary. While Spanish notaries are legally trained and mandatory for any property transaction in Spain, they are employed by the government and so officially do not act for either the buyer or vendor.

The role of a notary is to oversee and rubber-stamp the paperwork in a property transaction, check all necessary taxes are paid and register the property with the Spanish Land Registry.