Legal & Tax advice
When you buy or sell real estate in Spain, you encounter several issues that you do not deal with daily. We inform and guide you in every step of the purchasing or selling process.
Do you own real estate in Spain? Then there are several annual obligations you need to take into account. Below you find information about legal and tax issues that apply to non-residents in Spain.
Buying real estate in Spain
First Line Houses makes sure that the completion of your purchase of real estate in Spain is carefree.
- We make sure that the notary has access to all the documents needed for the purchase.
- NIE number, your tax identification number in Spain. It is required when buying or selling real estate. If you are not yet in possession of this number, we can arrange that for you.
- We draw up private contracts with the specific conditions that you and the seller agreed upon. We also check if the public sales contract is correct, in accordance with the mutual agreements.
- Land registry (Registro de la Propiedad). We verify if there are any servitudes, debts or burdens on the property of your interest. We also see if there are payments due of municipal taxes or the payments to the owners association.
- Declaration of habitability (Cédula de habitabilidad) and licence of first occupancy (Licencia primera ocupación). With new buildings, we make sure that these two documents have been issued by the authorities. It depends on these licenses whether the house can be connected to public utilities with full potential.
- Building regulations. In case of building plots it is important to know what the specific regulations are. These can differ per district, per residential area or even per part of the area. Moreover, the general regulations of a village or town can also be determining for requisites for the access to the plot, services, the color of the house, and the like.
- Public utilities. We check if there are any debts with utility companies and arrange for the contracts to be transferred onto your name after the purchase.
You can ask First Line Houses to guide you in the application for a mortgage in Spain. Mortgages to non-residents are obtained up to a maximum of 60& to 70% of the appraisal value. Nowadays the banks are reserved in providing mortgages and you are asked to put in the rest of capital, as well as the additional taxes and costs of buying real estate and the registration of the mortgage. In addition, the relation between monthly mortgage payments and your income is measured.
For payment of the purchase price, the majority pays by means of a certified check at the notary. In other cases, a direct bank transfer is made to the seller. The Notary does not take part in money issues, but the payments are arranged by mutual agreement between buyer, seller and estate agent. Get well informed by your licensed realtor about the taxes and costs that you will be charged with, so you do not get any surprises afterwards.
Taxes and additional costs
The purchase of real estate in Spain is subject to the following taxes:
- Transfer tax (ITP – Impuesto sobre Transmisiones Patrimoniales). It applies to resale houses and plots from private individuals. In Catalonia the tax amounts to 10% of the purchase price.
- Value added tax (IVA – Impuesto sobre el Valor Añadido). In case you are the first buyer of a new development, or when you purchase real estate from a VAT-registered company, VAT is 21%.
- Stamp tax (IAJD – Impuestos sobre Actos Jurídicos Documentados). When VAT applies to the purchase as mentioned above, you also pay a stamp tax of 1,5% of the purchase price.
By default the buyer also pays the notary costs and deed registration fees.
Do you own real estate in Spain?
As a non-resident owning real estate in Spain you have to pay annual taxes:
- IBI (Impuesto sobre Bienes Inmuebles) or council tax. It is calculated on the basis of the cadastral value of the property and paid to city hall.
- Fees to the owners association. These fees vary for each association. It happens that in some areas no association is founded.
- Imputable income tax or rental tax. Although you do not earn an income from the property, in the eyes of the Spanish tax authorities you still derive a benefit from owning a property in Spain and therefore have to pay an imputed income tax. It is paid annually to the Spanish tax authorities.
Selling real estate in Spain
When you sell real estate as a non-resident of Spain, buyers have to withhold 3% of the sales price and pay it to the Spanish tax authorities as an advance payment on capital gains tax on your behalf. It is the responsibility of the buyer that this tax is paid. If the 3% exceeds the tax due on the seller’s gain, the excess will be repaid. On the other hand, if the tax due is more than the retained amount, further tax will be due in Spain.
In addition, there is a municipal land tax (Plusvalia), which varies per municipality and depends on the time the property has been in possession. It is unrelated to the value of the purchase or sales deed.
Mentioned tax percentages and conditions are subject to change. Consult your licensed realtor for a tailor-made advice.