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Taxes when buying a resale property

When buying a  resale property there are  taxes to pay on the transfer of the property. The tax that the new owners of the property have to pay is called Impuesto de Transmisiones Patrimoniales (ITP). Every Spanish region can establish the applicable tax rate, and in the Valencian Community the rate is 10% of the property purchase price.

Please, note that there are also extra costs associated to the purchase of the property like legal fees which need to be paid to the Notary Public,  Land Registry and Solicitors fees.

If you need more information regarding the purchase of the property in Spain  contact us or download our free guide .

Taxes when buying a new build 

In case of purchase of the new build, this operation is subject to the Value Added Tax (I.V.A.). This tax is paid by the buyer (goods) or user (services). The Spanish VAT for the transmission of new built property is currently rated at 10% of the price of the property. The IVA tax is paid together with every payment made to the developer of the property.
In addition, there is another tax that is paid for the purchase of the new build  property, which is the Judicial Documentation Act Tax (A.J.D.) that is paid on most of the documents prepared by the Notary (official documents, like the title deed (escritura) as a percentage of the value declared on them.In the Valencian Community this tax is 1.50% of the value of the property.

Please, note that there are also extra costs associated to the purchase of the property like  legal fees which need to be paid to the Notary Public ,  Land Registry and Solicitors fees.

If you need more information regarding the purchase of the new build proeprty in Spain  contact us or download our free guide .

Non - Resident tax I.R.N.R. 

The income derived from the properties (rented or not rented) is subjected to non-resident income tax. The tax treatment is different depending on whether the property is rented or not.

When the property is not rented, non-residents are have to pay IRNR if:

  • You do not reside in Spain,

  • You own property in Spain,

  • Your property is exclusively for personal use and it is not rented out,

  • You do not have other source of taxable income in Spain.

Even if you do not earn income from the property, the Spanish tax authorities consider you have a profit from owning property in Spain and therefore have to pay imputed income tax.

The tax in this case is paid once per year , and the non- resident has to submit the tax declaration until 31st December  every year.

When the property is rented, the earnings are calculated by taking the gross income that is received from the rental. Some expenses could be deducted.Tax declaration must be submitted  every quarter.

If you need more information about your tax obligations in Spain  contact us or download our free guide .

Taxes when selling a property 

When selling your property in Spain, as a seller, you may be responsible for paying Plusvalia and capital gains tax.

When the  seller is a non-resident in Spain, the buyer is legally obligated to withhold 3% tax  of the  sale price at the time of the sale, which is submitted to the Tax Agency . If the amount withheld is greater than the tax liability, the seller will be entitled to a refund of the difference. If the amount is less, the seller is obligated to pay the outstanding capital gains tax.

Plusvalia tax is paid at the City  Council  where the property is located. This tax is calculated based on the time the property is owned and the proportions established by law and by the City Council.

Capital Gains Tax.

Contact us if you need more information about your tax obligatios when you sale a property in Spain   or download our free guide .

Council Tax 

This Tax is paid by all owners of real estate in Spain and is called IBI ( Impuesto sobre Bienes Inmuebles ) and it is a yearly direct tax based on the cadastral value of the property.
This tax is paid by the owners who as of January 1st own the property in Spain and the payment period is determined by the local authorities.
The owners of real estate are also required to pay waste tax that is paid twice a year.

Contact us if you need more information about your tax obligatios in Spain   or download our free guide.

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