INFO ON THE PURCHASE AND SALE OF REAL ESTATE IN Spain
What taxes do I have to pay when selling a property in Spain?
Capital Gains Tax
The capital gains tax is taxed on the profit made when selling a property. The profit is defined as the difference between the registered purchase price (plus expenses associated with the purchase) and the registered sales price.
The percentage of capital gains tax is different for residents and non-residents:
Since 2015, the capital gains tax for residents is 19% for gains up to to 6000 €, 21% from 6,000 € to 50,000 € and 23% from 50,000 €.
If you bought your property before 1995, there are special rules that further reduce the tax.
There are two ways for residents to be exempt from capital gains tax:
• Residents over the age of 65 who sell their primary residence where they have lived for at least the last 3 years do not need to pay capital gains tax.
• Residents who invest the entire sale price in the purchase of a new property can also be exempted from capital gains tax, provided they have lived in the property for at least 3 years. If only part of the money is invested in a new property, this will be taken into account as a percentage of the tax calculation.
Non-residents generally pay 19% on the amount of the profit. If the vendor is not a Spanish resident, the buyer must withhold 3% of the total sale price and forward it to the tax office. This will be credited as a down payment on capital gains tax. The vendor is obliged to make a tax return and to pay the remainder of the capital gains tax. If the capital gains tax is less than 3% of the purchase price, the difference can be reclaimed. It is advisable to seek advice from a lawyer or accountant.
This tax is based on the official appreciation of the property (valor suelo) from the time of the purchase to the time of sale. The calculation of the PlusValia varies from community to community. The exact value can be inquired at the respective municipality (Ayuntamiento), since here the increases in the value of each individual property are registered. In order to have the PlusValia calculated, you must indicate the "Referencia Catastral" as well as the date of purchase of your property. The "Referencia Catastral" of your property can be found on the IBI or on the bank statement of the last direct debit of the IBI fees.
As this information is only a summary, we strongly recommend that you take professional assistance - we do not guarantee the absolute correctness of this information.
What are the additional costs of buying a property in Spain?
The additional costs for the purchase of a property amount to approximately 10-12% of the purchase value. They are composed of the following taxes and expenses:
When purchasing a new building directly from the owner, the VAT is charged in Spain. The VAT (IVA) on a property has been 10% of the purchase price since 1.1.2013.
Property Transfer Tax or Impuesto sobre Transmissiones Patrimoniales (ITP)
If you buy a property from a private person, you will not pay VAT, but a land transfer tax. This tax has been staggered since the beginning of 2012 as follows: The first 400,000 € are taxed at 8%, the part of the purchase price of more than 400,000 € and under 700,000 € is taxed at 9% and everything over 700,000 € is taxed at 10%.
Stamp Tax or Impuestos de Acto Juridicos Documentados
The stamp duty is payable when you buy a newly built property or when a mortgage is needed to finance the property. The stamp duty amounts to 1.5% for new buildings and 2% for properties, which have already beein inhabited.
The sales contract must be certified in Spain by a notary. The notary fees are fixed and depend on the size of the property but, in general, are 1,5% of the purchase price.
Land registry fees
After the notary contract, the property must be re-registered in the land registry. Here fees due of approximately 0.5% of the purchase price.
We always recommend our clients to get advice from an independent lawyer, who will represent their interests and check all the documents, so you can be sure that no hidden surprises will occur after the purchase of your property. As a general rule, the legal fees are 1% of the purchase price.
Estate agents fees
These fees are paid by the vendor in Spain.
What steps are necessary to buy a property on the Costa del Sol?
If you have found your dream home and have agreed with the seller on the price, follow these steps:-
Private pre-contract / reservation contract
In this private preliminary contract, all details are laid out and the buyer pays a deposit of about 10% of the purchase price. In return, the seller takes the property off the market.
Application for the NIE number, the Spanish tax code number
Every buyer of a property needs a Spanish tax code - the NIE. This number is required to pay the applicable taxes at the Spanish tax office. The NIE is applied for at the local police station at the foreigners department. We help our customers to apply for this tax number.
Opening a bank account
The purchase price of a property must first be transferred to a Spanish bank account. Therefore, you should open a bank account in Spain before purchasing a property.
The notary contract (Escritura Publica de Compraventa) is signed in the presence of a notary and is therefore legally valid. At the signing of the notary contract, the remaining amount is paid by a bank draft and, in return, you receive the keys and will become registered as the new owner of the property in the "Escritura", the official sales contract.
Payment of all applicable taxes
Following the notary purchase agreement, the new owner is obliged to pay all necessary taxes. For more information on the applicable taxes, read the following information on taxes to be paid.
Entry in the land register
After signing the Escritura, the buyer can now be registered in the land register as the new owner of the property.
What are the annual costs associated with owning a property in Spain?
After purchasing a property, the following running costs are payable by the buyer:
The property tax (IBI Impuesto de bienes inmuebles) is paid once a year to the Town Hall. It is based on the cadastral value of the property in the land register and also depends on the size of the community. As a rule, the IBI will be sent out in June and is due in September.
Comunidad / Urbanisación
If the property belongs to a residential community, the costs incurred will be distributed between the residents. The amount depends on the size of the community and the communal amenities to be maintained, e.g. pool and gardens.
Waste disposal (Basura)
Every owner has to pay his share of the garbage disposal. Normally, this tax is collected together with the property tax (IBI).
Electricity / water / gas / telephone
These costs depend on the individual consumption of the owner.
Every owner of a property in Spain must submit an annual income tax declaration. This also applies to non-residents in Spain. The so-called form 210 calculates also for property which are used purely for private purposes only and not as a holiday rental, a fictitious rental value, which must also be taxed.