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legal and financial advice - tax considerations home / financial advice / tax considerations Tax considerations and other costs for property in Spain
» Mortgages
» Tax considerations » Spanish Glossary » Currency converter » Legal advice » Spanish bank account » The Spanish notario » Commercial Mortgages In general terms, allow about 10% to 11% extra to cover your tax liabilities and miscellaneous costs. This will cover the Spanish equivalent of VAT, known as IVA, which is calculated at 6% of the value of a pre-owned home or 7% of the value of a new property. It also covers stamp duty, which at present is 0.5%; a small fee that has to be paid to the property registration office; a charge for obtaining copies of the ‘escritura publica’; connections to local utilities and legal fees, which are usually about 1% of the sale value. You should also be aware that, as the buyer, you may be required to pay the seller’s fees, although this is a point for negotiation. Additional costs and fees If you buy from someone who is not an official Spanish resident you will be required to lodge a deposit equal to 5% of the sale price with the Hacienda or local tax office. This system was introduced to offset the risk of the seller leaving the country without settling his bill for capital gains and other taxes and it means that the seller won’t receive the proceeds of the sell until he has discharged his financial liabilities. Capital gains tax on property Capital gains tax, or ‘plus valia’ must be paid when the property is sold. It is calculated as 35% of the difference between the present value of the land and it’s value when last sold. Spanish law does not specify who is liable for this tax so it’s very important to include this in your negotiations and to have the agreement documented by a lawyer. |
