Taxation and costs

WHEN YOU BUY A PROPERTY

There are legal fees and taxes to pay on the transfer of a property.

There are fees which need to be paid to the Public Notary and the Land Registry.

The tax to be paid depends on which type of property is being bought and where is located (since the different Spanish Autonomous regions can legislate differently on the applicable tax rates):

> On the purchase of new properties:

  • VAT (Value Added Tax), at a fixed rate of 10% of the declared value of the property.
  • A.J.D. (Stamp Duties). This tax is in addition to above VAT above and is calculated at a rate of:
    – 1,5% for properties located in the Valencian & Andalusian Communities.
    – 2% of the declared value for properties located in Murcia Community.

> On resales:

I.T.P. Transfer Tax at a rate of:

– 8% of the declared value of the property for properties located in Murcia.

– 8% of the declared value of the property for properties located in Andalucia and with a price of up to 400.000 euros. Higher values are taxed at a higher rate.

– 10% of the declared value of the property for properties located in the Valencian Community.

**A good rule of thumb to calculate your budget when buying a property is to allow a 15% on top of the asked price. This will cover all taxes and costs you must pay –even solicitor fees-.

WHEN YOU HAVE BECOME THE OWNER

As a non-resident owner of a property in Spain you must be aware that you will be obliged to pay certain taxes in this country. These taxes are due in any case, irrespective of whether the property is used intensively or only occasionally or even if it is kept empty.

Income Tax (I.R.P.F.)

This tax is around 0.15% of the value of the property, and is paid annually, corresponding to the former natural calendar year. So if your property has a cadastral value of 100,000 Euros, then the payable amount would be about 150 Euros each year.

Local tax on real estate (I.B.I.)

This is a direct tax based on the value of the house. It is known as LOCAL RATES, COUNCIL TAX or IBI (and SUMA BILL in the Alicante Area). All these names refer to the same thing. Each Town Council determines the percentage to be applied to the cadaster value of the property. Every year the value of the tax is increased by applying the percentage given by the Government in the Nation Budget act. This is also a yearly tax and there is the possibility – strongly recommended – of setting up a direct debit.

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