About Taxes and Fees

 

 

 

When purchasing a property in Spain, there are a few taxes that would have to be settled, depending on whether you are buying directly from a developer (new construction) or a second hand home.

 

 

 

Value Added Tax (VAT or IVA)
Impuesto sobre el Valor Añadido (IVA).
This tax is levied when buying a new property or a property in the course of construction and is currently fixed to 7%, applicable to the official purchase sum. It is paid directly to the developer / vendor. In addition you would have to settle the 0,5% Stamp Duty. If you purchase parcels of land, commercial premises or garage spaces, the IVA rate is 16%, plus 0,5% Stamp Duty. However, if you purchase the garage with the property, the IVA is reduced to 7% (the maximum numbers of garages that can be included is two). Note: The IVA is incompatible with the ITP-tax.

 

Transfer Tax or Estate Tax (ITP)
Impuesto sobre Transmisiones Patrimoniales Onerosas.
When purchasing a second hand property, a transfer tax of 7% is applied to the official purchase sum. This tax is not the same as Value Added Tax, which does not apply to second hand property, neither does the 0,5% Stamp Duty tax.

 

The 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 burdens the increase of value of lands between the moment of its acquisition and its sale, 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 catastral value; d) and on 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 larger 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, why it is not uncommon that the purchaser settles this amount.

 

The stamp duty rate of 0,5% is 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.

 

 

 

 

Notaría
The Notary charges according to a fixed scale and depending on the official value of the property. Minimum charge is approx. 300 €.

 

As a rule of thumb the costs of registering your newly aquired property in the municipal property registry amounts to approximately 40% of the Notary fees. If you have also purchased a garage space independently of the property, the fees are similar to that of the Notary.

 

There is a minimum fee of 1.200 to 1.800 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 also be negotiated. Normally there is a default fee of 1% in constitution costs or subrogation costs, 1% is charged with parcial or full cancelation. In addition, there would be smaller fees to cover originating from the property registry, the Notary, Stamp Duty and 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. If different has been agreed upon, agent's fees normally vary from 5-10% of the sales price.

 

When a non-resident in Spain sells a real estate situated in the Spanish territory, the purchaser of the property, whether or not resident in Spain, must withhold 3% of the purchase price and pay this amount to the Inland Revenue to cover the vendor’s liability for tax on the gain obtained on the transfer. 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.

 

 

 

This tax is levied by the local town hall and is paid annualy. It is based on the fiscal or rateable value, the valor catastral, 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. In the case of Marbella, the formula applied is 0.85% of the rateable value of the property, which is usually far less than its true market value.

 

Wealth tax (patrimonio)
Impuesto sobre Patrrimonio
The Patrimonio tax is set on your assets in Spain, mainly property, bank account, car, bonds, stocks and shares. Non-residents are subject only to wealth tax on their assets in Spain, whereas residents in Spain also pay taxes on their off-shore assets, altough they are exempt from the dwelling in the tax form 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 value among the catastral 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.

 

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 catastral or rateable value of the property and then a rate of 25% tax is applicable to the base value. This tax is filed annualy. 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 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 18% applied to the base value.

 

 

When you purchase a home in Spain there are also normally fees connected to the running of a community in which the apartment, townhouse or villa is located, for instance a gated residential complex or urbanisation or a residential zone with a shared administration. These fees depend on the area and the size of the community and covers maintenance of gardens, pools, security etc. Please also note that there is a local litter collection tax to be paid to the local Town Hall annualy.