3. TAXES IN SPAIN.
The purchase of a property in Spain involves, both for residents and non-residents, a series of fiscal obligations which must be met:
3.1. TAXES ON CONVEYANCE OF ASSETS AND DOCUMENTED LEGAL PROCEDURES (ITP-AJD in its Spanish acronym) AND/OR IVA (VAT):
The IVA tax (VAT) is applicable to the purchase of newly built properties and urban plots which are immediately available for building. It amounts to 7% of the purchase price for the purchase of newly built properties, and 16% for the purchase of urban plots which are immediately available for building. This tax must be paid on each instalment. In addition, the obtaining of the title deed is also subject to Taxes on Conveyance of Assets and Documented Legal Procedures at 1%.
It is necessary to pay the ITP-AJD taxes (taxes on Conveyance of Assets and Documented Legal Procedures), when IVA (VAT) is not applicable. The rate of ITP is 7% of the property purchase price.
Remember the costs associated to a property sale transaction are normally 10% of the purchase price, and one of the mentioned taxes is included in this 10%.
3.2. TAX ON REAL ESTATE (IBI in its Spanish acronym):
The IBI tax must be paid every year, in one payment to be made between September 15 and November 15 (this is the usual period, however it might change in accordance with each Town Hall). Failure to pay this tax may result in the initiation of sanction procedures. We can ensure this payment is made by direct debit from your Spanish bank account.
3.3. WEALTH TAX:
If you are not resident in Spain, you must pay Wealth Tax (Impuesto sobre el Patrimonio), which is applicable to all the assets you have in Spain. Among these assets are real estate, bank accounts and other goods of a certain value. The rate of this tax is very low, usually around 0.20% of the total value of your assets.
3.4. PROPERTY INCOME TAX:
Non-residents who own properties in Spain must file their tax return with the tax authorities. Non-residents only have to declare the amount earned through their activities in Spain, rather than their global income. This includes their real estate assets, which are levied at 24%, and also the interests generated by deposits in accounts held in Spanish banks.
We advise that any person who owns a property in Spain, but is not resident there the entire year, should designate a ‘fiscal representative’ who will carry out all the procedures necessary before the tax authorities. We also offer this service.
3.5. CAPITAL GAINS TAX:
Capital gains tax is payable based upon the increase between the original purchase price of a property and the selling price. This tax applies to the seller, and is levied at 18% in the case of non-residents. Anyone purchasing a property from a non-resident must withhold 3% of the purchase price which is then paid to the tax authorities on account of any liability by the vendors. The vendor then has a 3-month period to pay the tax authorities the rest of this tax. Nevertheless it must be taken into account that there are situations where the tax due would be less, we can assist you in the matter.
 THE PROCESS OF BUYING PROPERTIES IN SPAIN |
 BASIC NECESSARY FORMALITIES IN SPAIN |
 TAXES IN SPAIN |
 MORTGAGES IN SPAIN |
 MORTGAGES CALCULATOR |
 CURRENCY AT MONEYCORP.COM |
