Cost and Taxes
If you’re looking to buy or sell a property in Spain, no doubt, you will have a long list of questions that need to be answered. For example, you may be wondering: what are the costs associated with buying a house in the Costa del Sol? What does it cost to sell a house? Are there any fixed expenses? It’s a good idea to have a clear understanding of the real costs and taxes you will face and, here at the Home Inspector Spain, our team of experts have extensive knowledge in this particular area.
Costs and Taxes for a Seller
Firstly, the Spanish state will request income taxes from the seller. A seller is liable to pay income tax on 15-45% of the profit made from the sale and this should be paid at the current tax rate. A local property tax is payable to the local authorities, which is calculated by the tax office and determined by the city in which the property resides and the cadastre value of the property. The value of the property tax typically lies between 0.6% and 1.3% of the cadastre value per year. Sellers should also be aware of the Plusvalía tax. This is a tax that refers to the ground the property is built on, rather than the property itself and it is calculated on the basis of 3 factors: the period of ownership, the location of the property and the cadastral ground value. Plusvalía tax is often a substantial sum of money and, as most people are unaware of it, it can often be an unexpected (and unpleasant) surprise.
Costs and Taxes for a Buyer
When purchasing a property in Spain, the state government benefits via a tax called “Impuesto de Transmisiones”. This is very similar to a conveyance tax and is usually valued at 8% of the given property price. The conveyance tax varies between the different municipalities in Spain. If you are a resident, under tax law, you may be able to pay VAT instead of the “Impuesto de Transmisiones” tax. Although the VAT rate is currently 21%, this option can be of interest for those who take in enough VAT, for a total of 4 years after the property purchase. Real estate buyers who purchase property in Spain, but live in the UK, have one additional tax-related payment to make. This is called “non-resident tax” (not to be confused with the IBI) and it should be paid each year by the 31st December.
If you are buying a house in Spain, there is one important piece of information that you should never forget. Taxes are so-called “Bringschulden”; they are a payment you won’t necessarily be asked to pay, but you still have to arrange to pay on time yourself. If you don’t, your property might be used to guarantee payment (known as embargo), with additional charges.
Here we offer a short summary of the costs associated with buying and selling a house in Spain:
IRPF – income tax on the profit of the sale, calculated using the initial purchase price and sale price and to be paid by the real estate seller.
Transmisiones – conveyance tax, 8% of the purchase price, to be paid by the real estate buyer.
Plusvalía municipal: a tax for the ground the property is built, to be paid by the real estate seller
IBI = property tax, annual payment, to be paid by the property owner.
Impuesto de no Residentes: 24% of the IBI, always to be paid on the 31st of December each year. Only for non-residents (people who live in Spain less than half a year).
All other expenses are maintenance costs and community costs.