A transfer of property in Spain can function differently from other jurisdictions and so it is important to be aware of the assumptions that the law makes with regards to responsibilities and liabilities for payments of taxes and charges when selling property in Spain.
The main taxes and charges connected with property ownership include the following: IVA or ITP (VAT on new or second-hand homes) Plusvalía (Capital Gains Tax), IBI (Council Tax), Comunidad Charge (If in a shared building or urbanisation), utility bills and, of course, any mortgage on the property.
Where the property being sold is second-hand then the tax payable is ITP and the rate is typically between 7% and 8% depending in which region the property is located as ITP is set by the regional government rather than at a state level and so varies a little as between each region.
When buying a new property IVA is paid on the purchase price to the developer or promoter when buying the property. It is then the responsibility of the developer or promoter to make their IVA returns to Hacienda (Spanish Tax System) in the usual way.
If a second-hand property is being purchased then it is the responsibility of the purchaser to pay this tax directly (using form 600) in the local tax offices within one month of signing the deeds.
This tax, equivalent to Capital Gains Tax with regard to property, is ordinarily the responsibility of the vendor as they have benefited from the increase in the value of the property since they previously bought it. This is not written in stone however and should the two parties come to an agreement it can become the responsibility of the purchaser to discharge this liability. In fact, where the vendor is a non-resident this liability actually shifts to the purchaser.
Of course if the vendor is resident and reinvests the funds in another primary residence then there is no liability for plusvalía.
If however, the vendor is a non-resident then the purchaser is obliged to retain 3% of the purchase price and pay this to the tax office. Evidence of payment is demonstrated with a stamped copy of form 211 and the vendor can then deduct the same amount from the purchase price.
It may be the case that the vendor has already paid the local Council Tax or IBI (Impuesto de Bienes Inmuebles) for the full year, yet will only be in the property for a portion of that time. If that is the case then upon facilitation of receipts for payment of the tax, a vendor will be entitled to add the extra amount paid to the price of the property. In any case the purchaser will be anxious to see receipts for the previous and current years IBI as they are otherwise liable.
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