Taxes when buying or selling

In Andalucia nearly a third of property sales or purchases are carried out by foreigners. The foreign population in Malaga has increased dramatically over the past few years.

If you are considering purchasing or selling a property  then you should be aware of a number of taxes that have to be paid.

Vendors or buyers should be aware of these tax implications so that these can be budgeted for in advance and taken into account in the agreed price.

Taxes in Spain corresponding to buyer:

1. IMPUESTOS DE TRANSMISIONES PATRIMONIALES (ITP): This tax is payable whenever a second hand property changes hands whether by sale or inheritance. It is charged by the autonomous region, (CCAA), in which the property is situated and is generally calculated at a rate of 8% of sale prices up to 400,000€. If the selling price is higher other increased percentages are applied to the difference. It should be paid within 30 days of the signing of the purchase deed by the buyer.
2. VAT +ITP: In the case of the purchase of a new property when the buyer is the first occupier the tax charged would then be VAT, which is calculated at a rate of 10% of the sale price of the property and in addition 1.5% ITP would also be applied.

Taxes in Spain corresponding to vendor:

1. PLUSVALIA: This is a municipal tax payable every time a property changes hands whether by sale or inheritance. This is a charge for the increase in the value of the land during the years of ownership and is calculated by the Town Hall based on the Cadastral value and should be paid by the vendor.
2. MODELO 211 RETENCIÓN EN LA ADQUISICIÓN DE BIENES INMUEBLES A NO RESIDENTES: This is a retention made when a vendor is not a resident in Spain. 3% of the selling price will be retained at the time of completion and duly paid to the Spanish Tax Office to cover any Capital Gains Tax which may be due. If no profit has been made and the vendor is up to date with his tax obligations he/she can apply for a refund.

As you can see the payment and payment deadlines, together with any other problems or complications that may arise during the purchase or sale of a property, require a specific knowledge and so it is recommendable to leave these matters in the hands of an experienced Lawyer.