Purchasing any property in Spain involves the payment of different taxes, ranging between 8% and 11.5%.
Depending on the property, these taxes vary. A new build has a higher tax rate than a resale, VAT - ( IVA in Spanish) - 10 % and also Stamp Duty - 1.5%, and is usually sold by a bank or the developer who built it. An agent may represent these properties, but the owner of a new build will rarely be a private individual.
The buyer is responsible for the payment of both taxes and IVA is payable in Spain on these taxes. The same applies to Resale properties, but in the case of a Resale it is called Property transfer tax - ITP in Spanish
This tax implication has regional differences., so at present on the Costa Del Sol, in the region of Andalucia (where Malaga is ) the property transfer tax is 8% on properties up to €400,000 and increases to 10% on properties over €700,000.
If you are dealing with our Intasunhomes office in Alicante it is 10% in all properties.
Please remember that these figures do NOT include legal fees, notary fees or gestors.
On the Costa Del Sol, we advise our buyers to allow 10% of the purchase price to cover all the costs. In Alicante, we say 13,5%
When buying from a non-resident person
If the seller is not resident in Spain, the tax implications also. The buyer is obliged, by the Spanish Tax office ( Hacienda) to withhold 3% of the purchase price.
This is transferred to Hacienda, as an Income Tax Retention within a month of signing the contract at the Notary's Office. The seller can claim this back after a period of time, less any outstanding taxes that mey be deductible. Talk to our legal representative about this as it is very important. You don’t want to be liable for any old taxes against the property.
The seller needs to file a tax return including this 3% of purchase price retained by the buyer. Your Lawyer will discuss this with you, but don’t be afreaid to ask!
Can nonresidents buy a property in Spain?
Absolutely. It is possible to buy a property in Spain as either a foreigner or nonresident. However, there are variations in tax payments whether you are a citizen from the EU/EEA or from outside the EU/EEA. It will also be possible to buy a property in Spain after Brexit, but as I write I can’t tell you the exact terms for British Passport holders.
How much tax will I pay if I sell my property in Spain?
Here we have two evils!
Plusvalia and Capital Gains Tax.
Capital Gains Tax is between 19% and 24% and Plusvalia would be a percentage of the sale
Plusvalia is paid to your Ayuntamiento or Town Hall. . The calculation is based on the valor catastral what it was when you bought, what it is when you sell and, the number of years between. The land value is in the IBI receipt and it increases every year, regardless of the real market value of the house, so Plusvalia is due even if you lose money selling, but can be appealed.
When the seller is a non-resident, the buyer could be found liable for the payment, so it is important to check by you or your lawyer that the Plusvalía Municipal has been paid within 30 days of the sale.
To get a calculation of what you can expect to pay before you put your property up for sale, get in touch with us by emailing francis@Lcpspain.com
Clients who list their property for sale with LCPSpain get this service for free.
Capital gains tax
Capital Gains Tax is
- 19% for non residents from EU/EEA countries or
- 24% for non residents from other countries.
Residents pay between 19% and 23%.
Remember you can claim some costs, such as the legal cost involved in buying the property in the first place, and… you will be entitled to some tax relief if you have lived in the property for at least 3 years before selling it.
For assistance with any aspect of buying a property in Spain, from finding it, to managing it, renting it or selling it, feel free to send a Whatsapp message to +34 648088100 with your name and question and we will get back to you as soon as possible.
Take care and we will chat with you soon.