Tax buy

Summary of the taxes you have to pay when buying, selling or just owning a property in Spain.

Selling:
  • Capital Gain Tax — is the tax you have to pay for the difference between what you sold the property for and what you paid for it discounting the expenses you had on the transactions and investments on the property (if you are a non resi-dent in Spain, the buyer has to deposit 3% of the purchase price at the Tax Office to cover for this tax or other non paid taxes in Spain. A tax declaration of the sale has to be presented by the seller to liquidate that tax where the 3% retained will be accounted for: if the tax is higher than the 3% the seller will have to pay the extra but if the tax is lower the seller will get a refund). There are also special cases when you are over 65 years.
  • Plusvalia Tax—Payable to the Council to account for the increase of value of the land where the property is. The amount is calculated by multiplying the catastral value of the land, the number of years of ownership of the property and two more coefficients that depend on the Council.

Buying:
  • Transfer tax or VAT (plus AJD) — I have written some articles about this because there are some different cases depend-ing on the type of property: residences, land, garages, storages or commercials. In general, if it is a new property it will pay VAT (plus AJD—an additional 1,5%) ranging from 10 to 21% of the purchase price and if it is a second hand proper-ty will pay transfer tax ranging from 8 to 10% of the purchase price.
  • Notary and Land Registry expenses (although they are not really taxes are payable on each transaction).

Owning:
  • I.B.I. tax — it is payable to the Town Hall to pay for the maintenance expenses of the Council. It is calculated from the catastral value of the property.
  • Rubbish collection tax—it depends on each municipality and in some cases is also calculated from the catastral value of the property.
  • Wealth tax—this tax may be complex so if you are a resident in Spain is advisable to have a tax advisor.
  • Rental income of non residents—whether you are renting your property or not, the Tax office will require non residents to pay this tax. The base for the tax is also calculated from the catastral value.

Since each particular case is different, it is fully recommended that you check your own details with your lawyer or tax advi-sor.

What are the expenses related to the ownership of a property in Spain?

When talking about the expenses related to the ownership of a property in Spain, it is needed to separate the maintenance costs and the non-purely property maintenance related expenses. In this article, I will briefly refer only to the latest.

1.– Council Ownership Tax (Impuesto sobre Bienes Inmuebles — I.B.I.)

The I.B.I. is the short name for Impuesto de Bienes Inmuebles that means a yearly tax applicable to all Spanish properties. The I.B.I. is a local tax to be paid to the Council by the owners of the properties independent of the residential status that goes to maintain the infrastructures and the services of the Town Hall. The tax is calculated as a percentage (Benahavis applies a 0,4%) of the catastral value of the property, or sometimes called tax value.

2.– Rubbish Collection Tax (Basura)

The Basura is a local tax to be paid to the Council by the owners of the properties independent of the residential status that pays for the rubbish collection services of the Town Hall. Each Council establishes its own taxes that may go from a fixed lump sum per year to a percentage of the catastral value.

3.– Annual Wealth Tax (Impuesto de Patrimonio)

This tax is payable by residents and non-residents as owners of a property in Spain and it is fairly complicated so every owner should contact its tax advisor for additional information.

4.– Personal Income Tax

This yearly tax is only applicable to non-residents in Spain. There are two modalities according to whether the property is rented out or not.

· Rented out: the tax base is the yearly income received and declared (any owner has the legal obligation to declare that income) from the rental of the property. The tax is 25% of that amount.

· Not rented out: in this case, the tax base is calculated as 2% of the catastral value. The tax is again 25% of that value.

5.– Community fees

When you live in a condominium of properties, either a building of any class, a complex of townhouses or a community of independent villas where you have common elements to maintain or common services, there will be some common maintenance costs (pool, garden, roads, lights, security, etc.) that will be shared among the owners of the condominium. A yearly budget is prepared by the management body and the fees will calculated, in general, as a percentage (associated to the property) of that budget.

6.– Insurance

Although it is not compulsory in Spain to have a household insurance, it is highly recommended and it is not worth the risk of not having one.