Costs related buying a property in Spain
Legal costs for property transactions in Spain tend to fluctuate between 1% and 2% of the total purchase price. En general a buyer has to calculate with around 12 % one-time costs of the purchase price.
Resale purchase tax :
House buyers of resale property (as opposed to brand new) are required to pay the Impuesto de Transferencia de Propiedad (Transfer Tax ). This one-time tax collected, in particular, any payment transmission of real estate, if there is no VAT. That means if you buy from a private seller (no company). It is comparable to the UK real estate transfer tax. The tax rate is 10% of the notarized purchase price for a value more than € 700.000,- For properties with a value between € 700.000,- to 400.000,- you have to pay 9 %. For properties up to € 400.000,- is a 8 % payable. The tax is required within one month from the signing of the deed.
For better understanding of the complicated Spanish tax system a short example:
|Property Sales price € 1.5|
|Tax up to € 400.000,-||8 %||€ 32.000,-|
|Tax between € 400.001,- bis € 700.000,-||9 %||€ 27.000,-|
|Tax between € 700.001,- bis € 1.500.000,-||10 %||€ 80.000,-|
|Total amount of Transfer Tax||€ 139.000,-|
New Properties purchase tax :
Buyers of brand new houses o Apartments including Garages in Spain are liable to paying 10 % IVA (VAT). If the house is finished or is being built at the time of the purchase, plus an extra 0.5% stamp duty.
Increased patrimony tax payable to Spanish Treasury :
When a property sale in Spain takes place, a capital gains tax must be paid by the seller. According to Spanish fiscal law, the buyer withholds 5% of the total purchase price to make sure that the seller does not take the money and run. This amount represents a capital gains tax on the profit made by the seller at the time of the sale. That is the difference between the current (official) sale price and the price paid by the seller when he/she originally purchased the property + the value of any reforms and improvements carried out since then.
Taxes in Spain for non-residents and residents :
A person is resident for tax purposes in Spain if he is physically present in Spain for more than 183 days in any calendar year !
Property Taxes :
Impuesto Sobre Bienes Inmuebles: (Annual Rates) : This is the main local property tax affecting owners of properties in Spain payable yearly to the Town Hall. The amount of the tax is calculated by reference to the “valor cadastral” (official value of the property) registered in respect of all properties in Spain. The percentage charged varies from area to area.
Basura (Rubbish) : A local tax related to the rubbish collection to be paid to the Town Hall or Urbanization.
Personal Taxes :
Impuesto Sobre Patrimonio (Wealth Tax) : An owner of a Spanish property must every year, submit a Wealth Tax Return. This must show the value of all of that person’s assets located in Spain. The tax is based upon the real value of the property. For values up to 164,000 of assets, the wealth tax is 0,2 %. Above this level, the rates of tax increase slowly.
Impuesto Sobre la Renta de las Personas Fisicas (Income Tax) : Non-residents are also liable for imputed income tax on their property in Spain. This tax is calculated on the basis of 2% of the “valor cadastral” (rateable value) of the property. The tax rate is 25% of the taxable base.
Income and Wealth Taxes are payable in arrears, for example, the tax due for the tax year 2015 is paid in 2016, before the 31″ December.
Impuesto Sobre Incremento de Patrimonio (Capital Gains Tax) : Non-residents pay capital gains tax on profits arising from the sale of their Spanish assets. The tax is based on the difference of the value of the property when it was purchased and the value on its sale calculated by years. The first year after purchase there are no CGT to pay. As a general rule, the authorities require that buyers from non-resident sellers deposit 5% of the purchase price with the Spanish Tax Authorities.
We suggest property owners or buyers appoint a Fiscal Representative who will undertake on behalf of the taxpayer all dealings with the Spanish Tax Authorities.