BUYING A PROPERTY IN COSTA DEL SOL

BUYING A PROPERTY IN COSTA DEL SOL

FREQUENT QUESTIONS

COSTS AND LEGALITY

Municipal Added Value Tax (PlusValía)

  • Plusvalía  is an “added value” tax based upon the increase  from the prior (vendor’s) purchase to the present sale. It is usually not a  big amount in  apartments or townhouses, in  the case of villas with a l big  land it is more.

The vendor who is responsible for this payment, the amount payable  should be verified before proceeding with the purchase.

The total buying  costs involved in a residential property it is approximately 12% including the Notary fees and property registry  fees plus the solicitor fees ( 1.5%)

Transfer Tax (I.T.P.) scaled at 8%, 9% & 10%  the buyer is responsible for this payment  in any real estate (villas, flats, land, commercial premises,etc).

Up to € 400,000 – 8%

From  € 400,000 to  € 700,000 – 9%

From  € 700,000 to € 1,250,000 – 10%

In new properties VAT 10% – 1.5 % Stamp Duty.

Plots of land VAT 21%

Nota Simple.-will show immediately if the seller owns the property free of liens and encumbrances.

The private contract.- Reflect the legal description, final sale price, completion date and any special agreement between the vendor and the buyer.

Normally at signature of private contract is is paid the 10% of the sales price.

The normal completion in Notary  frame time it is about 2 months.

In the off plan and under construction properties should be  according to the building ordenance Law (LAW 38/1999), by a bank guarantee or insurance company.

(If the property it is not on time a certain date, the purchaser can reclaim the monies paid, plus interest).

By Law the developer will provide ten years on structure.

When the entire purchase price is paid for the property, the seller will issue the public deed of conveyance (escritura) to the purchaser, free of liens and encumbrances.

This deed is issued before a Spanish Notary, is passed from the notary to the tax office to be assessed for Transfer Tax if the property is a resale or second hand property, or assessed for Stamp Duty if the property is sold directly by the developer. Is then presented to the Property Registry for inscription. A provisional inscription in the registry is made immediately upon issuance of the deeds.

TAXES

Capital Gains Tax and Retentions

Capital Gains tax on the sale of properties for non-residents is set at 19% payable on profits earned on the difference of the property value between the year of purchase (purchase price plus costs) and the year of sale (sales price minus costs), based on the approved annual percentage increase on the base value approved by law.

All non-resident sellers, regardless of when they acquired the property, are subject to 3% retention of the sales price.

The taxes are from 19%- 45%

 Taxes for non-residents in Spain

  • Municipal Added Value Tax (PlusValía): Please refer to Part 1 of this article ”Municipal Added Value Tax (PlusValía)”.
  • Rates or Annual Property Tax (IBI): Please refer to Part 2 of this article ”Local rates or Annual Property Tax (IBI)”.
  • Rubbish Tax (Basura) Please refer to Part 2 of this article ”Rubbish collection & water rates (Basura) (Agua)”
  • Wealth Tax (Impuesto de Patrimonio)
  • Income Tax (Impuesto sobre la Renta).
  • Capital Gains Tax (Impuesto sobre Ganancias Patrimoniales Inmobiliarias) and Retentions.
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