All You Need to Know About…Taxes & Costs When Buying or Selling Property in Spain

      If you are considering purchasing a property in Spain, please spend a few minutes reading this guide to ensure that you aware of all the taxes and costs involved, not only in the purchase but also in the event of the sale, so that you do not get any nasty surprises. This summary also explains your annual tax filing obligations.

      What you need to know when you purchase a property in Spain

      Transfer Tax.– The purchase of a property in Spain is subject to a Transfer Tax which is payable by the purchaser. The tax rate varies depending on the region of Spain and it is usually between 7-10%. As an example, the tax rates applicable in Andalucía are as follows:

       

      ITP

       

      When you purchase a property from a developer, Transfer Tax is not applicable as VAT (currently 10% of the purchase price) is payable instead. Additionally, Stamp Duty on documentation associated with the property conveyance is also payable and this tax rate also varies depending on the region of Spain. This can vary between 0.5% and 1.5% and, for example, in Andalucía it is 1,5% of the purchase price.

      Notary fees and land registry fees.– In Spain all property transactions have to be signed before a notary public and then this deed is duly registered at the land registry of the municipality when the property is located. These costs are approximately 0.5% of the purchase price.

      Professional fees.- Depending on the value of the property and the complexity of the transaction, these fees are between 0.5% and 1.5% of the purchase price, subject to negotiation between the parties.

      Mortgage costs.– If you need Spanish bank finance for the purchase of the property, you will need to be aware that there will be additional notary fees, land registry fees and Stamp Duty. Sadly enough, by adding the bank commissions the total costs would be in the region of 2-3% of the mortgage capital.

       

      What are the taxes payable when owning a property in Spain.

      Income tax.- When a property is not rented to third parties, the property owners have to pay an annual tax based on the deemed rental value of their homes. The ‘taxable base’ is 2% of the cadastral value of the property (1.1% if this value has been revised during the last 10 years), and the tax rate is 24%. No property costs can be deductible. However, for EU residents the tax rate will be 20% in 2015, and will be reduced to 19% from the 1st of January 2016.

      If the property is rented to third parties, the rental income needs to be declared and the tax paid to the Spanish tax office. For EU citizens, the tax rate is 20% (19% in 2016) of the net rental income, whereas for non-EU citizens the tax rate is based on the gross rental income.

      For EU citizens, only the costs that are directly related to the generation of the rental income are deductible (e.g. agents fees, cleaning, laundry, repairs and maintenance). In the case of all other property costs (e.g. local rates, community fees, utilities or interest on bank mortgages) they are only deductible pro rata to the number of days the property is rented.

      For the number of days, within a calendar year, a property is not rented out, it remains subject to deemed rental income as explained at the beginning of this section.

      The tax declaration is called Modelo 210 and the deadline for the payment is 31 December each year.

      Wealth tax.- Non-resident individuals are subject to wealth tax on the value of their Spanish assets, but only for the net value that exceeds 700.000 € per property owner. The tax bands and tax rates are as follows:

      wealthtax

       

      The tax declaration is called Modelo 714 and the deadline for the payment is on 30 June each year.

      Local rates (IBI and Basura).- This is the annual municipal tax called ‘Impuesto sobre Bienes Inmuebles’ (IBI), which is based on the cadastral value of the property. This tax varies depending on the municipality in which the property is located. There is an additional rubbish collection tax which is paid twice a year.

      The Spanish Town Halls are not obliged to ensure that the tax demands are properly received in the property’s address as they are sent by normal post. Therefore you should ensure that you arrange for the payment of these taxes by direct debit.

       

      What you need to know when you sell a property in Spain

      Capital gains.- This tax is calculated by the difference between the sale price and the purchase price, having deducted all the necessary costs related to the respective purchase and sale, and adjusted by Spanish indexation relief. The tax rate is 20% for 2015 (19% in 2016).

      When the property is sold by a non-resident, the purchaser has the obligation to withhold 3% of the sale price and pay it to the tax office within one month from the date of the purchase. This is considered as a payment on account of the total tax payable by the vendor. If the capital gains tax payable by the vendor exceeds the 3% tax withheld, the balance is paid to the tax office within four months from the date of the sale, and if lower the vendor will be able to reclaim for a tax refund.

      Plusvalía Tax.- This local tax is paid to the Town Hall where the property is located, and is based on the increase of the value of the land between the date of purchase and the date of sale. The tax rate increases in accordance with the number of years the property is owned, with a maximum of 20 years.

      Other costs.- Normally there are no notary fees or land registry fees, as they are payable by the purchaser, unless otherwise agreed between the parties.

      Professional fees for dealing with the sale are based on the value of the property and the complexity of the transaction and, as for the property purchase, they are normally between 0.5% and 1.5% of the sale price. If the property has a Spanish mortgage and has to be cancelled prior to the sale, there will be notary fees and land registry fees payable by the vendor, which are normally withheld by the purchaser.

      Client Testimonials

      Below is a list of recent reviews received from our clients, obtained via the Wufoo client survey platform:

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        Vicky S, UK
        Tuesday, April 17, 2018
        Alvaro answered my emails and all my questions efficiently and helped me were I did not understand through the whole process of moving the tenant and selling the property and arranging and introducing... an estate agent.

        He has exceeded my expectations after being let down by previous lawyers in Spain when its been a very traumatic time for me.
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        Pernilla, London
        Friday, April 13, 2018
        We had excellent service from Esther at Advocate Abroad when buying a property in Las Palmas, Gran Canaria.

        Esther speaks both Spanish and English, and is very friendly, professional and genuine. ...She took care of the whole purchasing process and explained all the steps for us, including giving advice on Spanish bank account, NIE numbers etc.

        We are very pleased with all the help we have received and can highly recommend Esther. Thank you so much!
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        David Pratt, Alhaurin del Grande
        Friday, April 13, 2018
        Alvaro gives me confidence that he understands the issue and gives me practical solutions. He works rapidly and efficiently. I would strongly recommend his services.
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        ESP, London
        Wednesday, March 28, 2018
        Cristina was extremely helpful, she couldn't have done more. Her English is sufficient and I would definitely recommend her to friend.
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        L Marshall, London
        Wednesday, March 28, 2018
        Rosa was excellent. Very efficient and professional.

        Responsive and always available. Extremely helpful - we did not understand the process and she guided us through.

        We would not hesitate to ...recommend her.
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        Phil Loughton, Las Lagunas de Mijas
        Tuesday, March 20, 2018
        Alvaro was extremely helpful and the simple process I needed managed was dealt with quickly and efficiently. I would certainly recommend him to friends.
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        John Burchell, Arroyo De la Miel
        Tuesday, March 20, 2018
        Alvaro was very professional, helpful and friendly. Understood things quickly. Explained things well in English. Very easy to contact at any time.
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        A. Kavanagh, Glasgow
        Thursday, March 15, 2018
        Miguel provided a great service and fully explained to me about the procedures with tax & business registration. My emails and questions where always answered straight away with an immediate response ...or solution.

        Very helpful and very friendly I would definitely recommend to anyone considering using Advocate Abroad
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        Robert Davies, Mallorca
        Monday, March 12, 2018
        Very supportive and clear on producing a suitable divorce settlement. Efficient, understanding and professional.
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        A.Kavanagh, Glasgow
        Friday, March 09, 2018
        Rosa was exceptional at helping me setting up my business abroad.

        This was a big move for me and Rosa fully explained everything to me in detail so I had a full and clear understanding of the lega...l side of things as well as always promptly responding to any emails or questions I had.

        I couldn’t of asked for a better lawyer and I would 100% recommend Rosa to anyone who is deciding to move abroad.

        Great service could not be happier.
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        Adam Clark, Tenerife
        Friday, March 09, 2018
        Oliver was very professional. He explained things very clearly and honestly at all times and in the end we got the best result possible in my particular case.

        Many thanks to him for his high level ...of service.
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        Patrick Martel, Canada
        Wednesday, March 07, 2018
        For being in another country and all our back and forth communicating over emails .. I thought Rosa did a brilliant job. Thankfully she was able to help where no one else was willing ..
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        Robert Scott, UK
        Wednesday, March 07, 2018
        First class service. Rosa's professionalism, advice and patience were all exemplary! Keep up the good work. Will certainly recommend the service to friends!
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        Martina, Plymouth
        Monday, March 05, 2018
        Erardo was fantastic and helped immensely during a very difficult situation.

        He consulted with my lawyer in the UK and explained to her what needed done. Without him the situation would not have be...en resolved. He was very understanding and I would have no hesitation whatsoever in recommending him. Outstanding.
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        M Pearce, Marbella
        Monday, March 05, 2018
        Miguel was extremely helpful, he couldn't have done more:

        Always kept us updated on the progress of our purchase
        Always responded to emails in a professional and timely manner
        Always explained to... our understanding all aspects of the legalities about the purchase
        Very approachable,courteous and professional

        So much better to deal with than UK property lawyers!

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        Tony, London
        Wednesday, February 28, 2018
        The service I received from nada was very helpful.

        The tasks were completed to the highest standard and would definitely use her services again in the future. All correspondence was received in a ...very timely manner. Highly recommended.
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        Holly, Lanzarote
        Friday, February 23, 2018
        The divorce process could have been explained more clearly and accurately so that a more realistic time for completion can be attained.
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        Julia Alcock, Puerto Rico, Gran Canaria
        Thursday, February 22, 2018
        Esther was very friendly and approachable. She was professional and answered any questions I asked. We would definitely use her again in the future.
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        Tamara Malcolm, Mallorca
        Tuesday, February 20, 2018
        Rosa was and is extremely knowledgeable and helpful. Her advice was excellent and i will definitely be using her expertise again in the future.
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        Nick Nicolaou, Oviedo
        Tuesday, February 20, 2018
        Very Satisfied with Miguel's work. He was very helpful and we would definitely use his services again in the future.
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        Gavin Jones, UK
        Monday, February 19, 2018
        It was a real pleasure to have Miguel working on my behalf to file my non-resident taxes. He was extremely helpful, gave reassuring advice and I had a high level of confidence in the transactions.

        ...Miguel is now acting as my fiscal representative in Spain and I plan to continue to use his firm's services for all my tax requirements.
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        Martin Hickey, Benidorm
        Sunday, February 18, 2018
        Very friendly and knowledgeable and professional.

        Juan explained the plus and the negatives on various subjects and allowed us to make up our own mind.

        I have already recommended him to our fri...ends.
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        Andrew Bullen, UK
        Friday, February 16, 2018
        Rosa was very professional at all times when dealing with me. Her English was second to none and she always kept me informed of progress via email promptly.

        I wouldn't hesitate to use Rosa in the ...future for any legal issues I have.
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        Tamara Reeves, Australia
        Thursday, February 15, 2018
        Anna was very knowledgeable and had prior experience dealing with English clients. She spent a lot of time explaining information and I was never rushed.

        I have continued to use Anna since my firs...t meeting as I trust her judgement and know that she will look after my best interests.
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        Ali Hashemi, Alicante
        Wednesday, February 14, 2018
        Rafael was extremely helpful, accommodating and understanding. He couldn't have done more.
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        Alan W T Duguid, Montserrat, Valencia
        Wednesday, February 14, 2018
        Ramon was very helpful and answered my questions and explained the legal process that I was enquiring about.

        I would liked to have seen a follow up email detailing what was discussed to ensure that... my understanding and recollection of the meeting was completely correct.
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        Keith Round, La Herradura, Spain
        Monday, February 12, 2018
        The advice provided was clear, easy to follow and allowed me to secure the required documentation from the Spanish Authorities quickly.

        Rosa was very proactive in following up when I was delayed in... providing inputs and always delay with any questions promptly.

        I would not hesitate to recommend Rosa to friends and colleagues and I would use her again in the future
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        GWE, Ireland
        Thursday, February 08, 2018
        My lawyer Nada was extremely effective to make the case and get a result!
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        Chris Jones, Cambrils
        Tuesday, February 06, 2018
        Regardless of the situation Emma, looked for the best possible way to assist under the circumstances. Emma was very approachable and professional.
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        Richard Quick, Estepona
        Sunday, February 04, 2018
        I was particularly impressed by Miguel's approachability & professionalism, excellent service!

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