If you are considering buying or selling a properties in Spain, then you should be aware that a number of taxes in Spain that have to be paid.
In Andalucia nearly a third of property sales or purchases are carried out by foreigners and the foreign population in Malaga has increased dramatically over the past few years.
Vendors or buyers should be aware of these tax implications so that they can be budgeted for in advance and taken into account in the agreed price.
Buying or selling properties in Spain
The importance of knowing the fees associated with buying or selling a property in Spain lies in the need for proper financial planning in real estate transactions. When buying a property, it is essential to understand transfer and acquisition taxes, Value Added Tax (VAT), or Property Transfer Tax (ITP), depending on whether it is a new or second-hand property. Not being aware of these fees can lead to unpleasant financial surprises.
Likewise, when selling a property, it is important to be aware of capital gains taxes and other costs associated with the transaction. Failing to meet these tax obligations can result in fines and penalties.
In summary, being informed about the fees you must pay when buying or selling a property in Spain is crucial to avoid financial and legal issues. Lack of knowledge in this area can have serious consequences, so it is advisable to seek professional advice and fully understand the tax implications before proceeding with any real estate transaction.
Taxes in Spain corresponding to buyer
- ITP. Property Transfer Tax. This tax is payable whenever a second hand property changes hands whether by sale or inheritance. It is charged by the autonomous region, (CCAA), in which the property is situated and is generally calculated at a rate of 8% of sale prices up to 400,000€. If the selling price is higher other increased percentages are applied to the difference. It should be paid within 30 days of the signing of the purchase deed by the buyer.
- VAT +ITP. In the case of the purchase of a new property when the buyer is the first occupier the tax charged would then be VAT, which is calculated at a rate of 10% of the sale price of the property and in addition 1.5% ITP would also be applied.
Taxes in Spain corresponding to vendor
- Plusvalia. This is a municipal tax payable every time a property changes hands whether by sale or inheritance. This is a charge for the increase in the value of the land during the years of ownership and is calculated by the Town Hall based on the Cadastral value and should be paid by the vendor.
- 211 Tax Form (Modelo 211). Retention on the acquisition of Real Estate for Non-Residents. This is a retention made when a vendor is not a resident in Spain. 3% of the selling price will be retained at the time of completion and duly paid to the Spanish Tax Office to cover any Capital Gains Tax which may be due. If no profit has been made and the vendor is up to date with his tax obligations he/she can apply for a refund.
As you can see the payment and payment deadlines, together with any other problems or complications that may arise during the purchase or sale of a property, require a specific knowledge and so it is recommendable to leave these matters in the hands of an experienced Lawyer.
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If you need legal advice on buying or selling properties in Spain, do not hesitate to contact us to arrange your free, no obligation appointment to discuss the above or any other legal matter.
MALAGA SOLICITORS GROUP
Jose M. Lopez-Avalos – Solicitor
Tel. 952 901 225 – mail@malagasolicitors.com
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