DISCLAIMER:- The following is purely for the interest of the reader
and should form no part of any decision to buy or rent property in
Spain.
It
is strongly recommended that a qualified Spanish Tax Lawyer is consulted first.
Under Spanish law a non-resident is required to appoint a
representative to take care of their Tax commitments.
It
is also the responsibility of the owner to know what and when to pay
(self assessment).
As a very general
"rule of thumb" 10% of the purchase price will cover all Taxes and
Fees.
Purchasing property in Spain will
incur taxes which will vary slightly depending on whether you are
buying directly from a developer (new construction) or a re-sale.
Taxes that
relate directly to the purchase:
Value Added Tax (VAT or IVA)
Impuesto sobre el Valor Añadido (IVA).
This tax is levied on new
property or a property project and is currently
fixed at 7% (2005) of the official purchase price, plus 0,5% Stamp
Duty.
On the purchase plots of land,
commercial premises or garage spaces, the IVA rate is 16%, plus 0,5%
Stamp Duty.
When you purchase the garage with the property, the IVA is reduced to 7% (the maximum numbers of garages that can be
included is two).
Impuesto sobre
Transmisiones Patrimoniales Onerosas.
With a re-sale property, a Transfer Tax of 7% is applied to the
official purchase price. There is no Stamp Duty or VAT.
Municipal Capital Gains Tax
(Plusvalía)
Impuesto sobre el
Incremento del Valor de los Terrenos de Naturaleza Urbana or Impuesto
Municipal sobre las Plusvalías.
In general this tax is applied to the increased value of land from
the purchase price to the sale price, and is levied by the local Town
Hall based on:-
a) the particular area where the property is
located;
b) the surface area of the plot;
c) the cadastral value;
d)
the date of the previous title deed (escritura).
This tax may range from a few
euros to as much as hundreds of thousands of euros on properties with
a lot of land. By the law the vendor is obliged to pay this tax,
however it has become customary to negotiate this, and it is not
uncommon that the purchaser settles this amount.
Stamp Duty Tax
Impuesto sobre Actos
Jurídicos Documentados (IAJD)
There is also a stamp duty rate of 0,5%
applicable to certain types of notarial and commercial documents
executed in Spain or abroad if they have legal or economic effects in
Spain. It is applicable with VAT when a new property, plot of land or
commercial property is purchased.
Fees in direct
relation to the purchase:
Notary fees
Notaría
The Notary charges are according to a fixed scale and depending on the
official value of the property. Minimum charge is approx. 300 €.
Inscription in the
Municipal Property Registry
Registro de la
Propiedad
Roughly the costs of
registering your newly acquired property in the municipal property
registry will come to approximately 40% of the Notary fees. If you have
also purchased a garage space independently of the property, the fees
will be similar to that of the Notary.
There is a minimum fee of 1.200 Euros that the lawyer can charge, otherwise he is entitled to a
minimum of 1% of the purchase value.
This varies from bank to bank and can
be negotiated. Normally there is a default fee of 1% in
constitution costs or subrogation costs, 1% is charged for partial or
full cancellation. In addition, there would be smaller fees to cover
the property registry, Notary, Stamp Duty, the
appraisal and the banks' study of each individual case.
This is customarily settled by the
vendor and not the purchaser, so it shouldn't normally worry the
buyer. Agent's fees are usually
from 5-10% of the sales price.
5% retention tax on
non-residents in Spain
When a non-resident in Spain sells
Spanish
real estate the purchaser of the
property, whether or not resident in Spain, must withhold 5% of the
purchase price and pay this amount to the Inland Revenue to cover the
vendor’s liability for tax on any capital gain made by the transaction. The
vendor can deduct this amount in his annual tax return from the
capital gain of the sale, and if the amount withheld exceeds the tax
finally payable, the excess is refundable. The tax does not apply to
properties with title deeds issued previous to 31 December 1996.
On going Taxes
Local property tax (IBI)
IBI:
Impuesto sobre Bienes Inmuebles
This tax is levied by the local town
hall and is paid annually. It is based on the fiscal or rateable value( valor
cadastral ), of the property and takes into account the value
of the land plus the value of the building, according to type,
location, and usage. Upon this value, each municipal Town Hall decides
on the percentage to be charged in respect of local rates.
Wealth tax (patrimonio)
Impuesto sobre
Patrrimonio
The Patrimonio tax is levied on Non-residents based on their assets in Spain.
Residents of
Spain must pay taxes on Spanish assets and their off-shore assets,
although they are
exempt if it has a value of less than approx. 150.000 Euros.
Non-residents are subject to Wealth Tax on any property located in
Spain at the same rates as residents, and a tax return must be filed
and presented every year to the Tax Authorities. The tax on urban
property is based on the highest cadastral value, the purchase value or the value given by
the Tax Authorities in an evaluation carried out for other tax
reasons. This is the base value for taxation and the final taxable
value is determined by the difference between this base value and the
charges or liens on the property and the main debt invested in the
property, if there are any. A tax scale is applied to this final value
in order to determine the payable tax amount. For values of assets up
to 163.848 Euros , the wealth tax is set to 0,2%. For superior values
the rate increases gradually.
Income tax (IRPF)
IRPF: Impuesto sobre Ia Renta de
las Personas Físicas
Also non-residents are liable to
personal income tax in Spain, on property included, as the Spanish Tax
Authorities assume that the owner of the property is receiving an
annual income from it. Income on property is set to 2% of the
cadastral or rateable value of the property and then a rate of 25% tax
is applicable to the base value. This tax is filed annually. The tax on
capital gains is 35%. Non-residents must file a tax return within 30
days from the date the income is collected. This tax return can be
filed monthly or quarterly in certain cases.
Capital gains tax on property
Impuesto sobre
Incremento de Patrrimonio
Capital gains is due with the sale of
a property and the tax is calculated as the difference between the
value of the property at the time of its acquisition and the value at
the time of its sale. The tax rate is 35% applied to the base value.
Other fees
Community charges are normally
handled by the residents themselves and are determined each year as to
the costs relating to gardens, pool maintenance, security etc.
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