BUYING PROPERTY IN SPAIN

Below you will find information about what is involved in purchasing and selling a property in Spain. This is a guideline only and you should always seek advice from your lawyer to check if these situations apply to you. We can get you in contact with efficient lawyers we have worked with in the past, but should you wish to find one on your own, we have created a list of respectable lawyers in this area on this website for your perusal.

TAXES & COSTS ON PURCHASE

- Off Plan and New Development: Total approx. 10%
• 7% VAT Houses/Apartments (Purchaser)
• or 18% VAT plots and business Premises
• Generally 1% stamp duty (Purchaser)
• Notary (Purchaser)
• Registry (Purchaser)
• Municipal Plus Valia (Vendor or negotiable purchaser)
• Lawyer. Each party its own.

-Resale Property: (Total approx. 9-10%)

• Generally 7% Transfer tax (Purchaser)
• N.B. Special cases have reduction: (ex. Special case for reselling properties by registered real estate companies: 2%
• Notary (Purchaser)
• Registry (Purchaser)
• Municipal Plus Valia (Vendor or negotiable purchaser).
• Lawyer (Each party its own)

-Declaration of building:
• 1% Stamp Duty
• Notary
• Registry
• Structural insurance/OCT (approx. 2%)

-Company Formtation:
• 1% Stamp Duty
• Notary
• Comapany Registry
• Property Registry (assignment of real estate into Company).

-Mortgage: (Total approx. 2% of loan)
• 1% Stamp Duty
• Notary
• Registry
• Property Valuation
• Bank commissions (negotiable).

INTERESTING ASPECTS WHEN PURCHASING

-General procedure:

1. Reservation 3.000-6.000 €
2. Option contract 10%. Usually four weeks
(Purchaser’s personal attendance not necessary)
3. Preparations of loan, Power of Attorney
and further documentation.
4. Completion Title-Keys-Payment balance.
(Purchaser’s personal attendance or Power of
Attorney necessary if Mortgage)

Vendors liability:

-Developer:
• 10 Year structural. Insurance necessary from
May 2000.
• 3 year System defects (A/C, pipes, electricity
etc. ).
• 1 Year ´cosmetic´ defects.
-Private:
• 6 Months hidden defects.
• Vendors liability passes over to the purchaser
for remaining time of guaranty.

Important points to check:

-Plot: Size, boundaries, and building conditions.
-Buildings: Specifications, description, boundaries.
-New Houses and Developments: Existence of structural insurance and Bank guarantees for amounts paid on account.

Running Costs of owning a Property:

- Non Resident private individual:
• 0,5% on the Catastral value (´income Tax´)
• 0,2% on the Title Deed value (´wealth Tax´)
- Non Resident off shore company: 3% on Catastral Value per annum.
- Land Tax (Rates): average of 0,80 on catastral value in this area.
- Rubbish rates: depending on area: between 18 € and approx. 200 €
-Community Fees-Urbanisation costs: Depending on budget.
-Company Maintentance (if ownership with company choosen).

CAPITAL GAIN TAXES

RESIDENT Sellers of a Property (Private Individuals):
-Sale less than 1 Year of owning property: progressive %
-Sale after one Year of owning property: Generally 15% (deductions possible).
-Exemption for reinvesting in new principal property (totally or partially).
-No tax if vendor over 65 Years of age.

SPANISH COMPANY as Seller of a Property:

- Holding Companies: (very interesting formula)
• 15% for sale of property.
• 40% on business activity.
- Active Companies:
• 35% for any sale or activity.

NON RESIDENT SELLERS of a Property (private Individuals):

-35% of the gain (deductions possible).
-N.B.: 5% of purchase price will be retained by purchaser in lieu of capital gain tax. Unless:
• Property was purchased before 31/12/86
• Vendor is Tax Resident (certified by tax office.

Sale of SHARES of a Spanish Company by vendor (Sale of the company):

-Non Resident sellers: generally 25% (no branch in Spain)
-Resident sellers:
• Progressive if before one Year.
• 15% if after one Year.
NB. Stamp duty would be applicable at 7%.

INHERITANCE TAXES:

-Starts at approx. 8% upwards. Allowance approx. 17.000 Euro per heir.