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 relating to property ownership.
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. In this note we deal with Plusvalía or Capital Gains Tax.
This tax is ordinarily the responsibility of the vendor as they have benefited from the increase in the value of the property since it was previously bought. 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. It is therefore extremely important to check the paperwork to ensure that there is no clause that states that the capital gains tax liability is different from that which has been agreed with the other party.
Of course if the vendor is resident in Spain and reinvests the funds in another primary residence then there is no liability for plusvalía. That said, the fact of the sale should still be declared in the annual tax return to avoid any difficulties further down the line.
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.
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