Take advantage on the tax reliefs applied in Andalusia until the end of 2021, save up to 3,3%.
Summing it up all with numbers:
On a €500,000 sale price, the tax savings are 15% until 31st Dec 2021.
On a €3,000,000 sale price, the tax savings are 27% compared to “normal” rates.
Tax by tax it looks like this:
What to remember when buying a property in Spain?
When buying a property in Spain, the process can be very different from that of your home country. Make sure that you know what costs are involved, the taxes that you need to pay and the problems that could occur.
When an offer has been accepted, appoint a Spanish speaking, local Spanish lawyer. We can recommend you one or you can choose by yourself, the important thing is to have your legal representative in Spain.
Sign a contract “contrato de compra-venta”, once your solicitor has checked the details on this.
Pay the deposit to reserve the property in your name. NEVER pay this unless your solicitor has checked the contract and NEVER pay this directly to a seller or without both parties signing a contract.
Obtain your Foreigners Identification Number (NIE), which is obligatory for the purchase.
Arrange for a Power of Attorney, if you need this.
Open a bank account.
What kind of material/documents/requirements does the buyer need to have to purchase a property in Spain?
A physical person needs passport, and the NIE number.
A legal person needs the company Deeds apostilled and translated, tax number in Spain, and NIE for the company´s administrator.
What is the process of buying a house in Spain?
Before buying a property or even signing a private contract, contact with a solicitor to check if all the documents are in order, empower him/her to obtain the NIE for you, to represent you at the Tax Office, and to sign the deeds on your behalf
If it is a built house first sign a private contract to oblige both parts and fix a date to sign the tittle deeds. In this document there will be established the payments to be made and the date of completion by the vendor and buyer. For this it will be good to open a bank account in Spain.
Your solicitor can open it in your name but the banks might require the owner to be in Spain three months before to meet them personally.
Usually the last payment will be completed at the same time the tittle deeds are signed in case all the documents of the dwelling are ok.
After signing the deeds, your solicitor will proceed with the inscription in the land registry.
Do customers need to sign in Spain in person?
It is not necessary, they can empower a solicitor to act on their behalf.
How to protect investors’/buyers’ legitimate ownership of the purchase of real estate in Spain?
They can be protected by obtaining bank guarantees for all the payments done off-plan.
Shall I draw up an international will?
When buying a property in Spain we strongly recommend that you have a Will to deal – at least – with your Spanish assets (although you can extend it to your worldwide assets).
What are the purchase related costs?
Property prices you see in brochures are always net prices. Above the net price you shall calculate with the following costs when buying a property in Spain (in general, but local rates may vary):
In case of bank financing: Mortgage cost of approx. 400 EUR + Notary and Land Registry Fees of Mortgage Deed
Other costs to bear in mind are:
Property Ownership Tax (IBI): This is the local tax which is paid annually and based on the cadastral value “valor catastral” (0.5-1%).
Income Tax for Non-Residents & Residents (see point 10).
Wealth Tax: Payable annually, based on the value of total net assets as of 31st December of each year after the free allowance of 700.000€ (only 500,000€ in the Valencian Commnity and Cataluña)
Rubbish Collection Tax.
Water supply and Sewage Tax.
Community expenses – if you are in a community of owners.
What items can be deducted from rental income tax?
All costs related to renting activity, like IBI tax, employers or real estate agent commissions, cost of maintenance and – in case of long-term renting – there is also a 60% bonification on incomes. Nevertheless, if you are a non-EU/EEA citizen, no deductions can be applied.
What property taxes do I need to pay if I sell the property? How is the capital gain tax calculated?
If you are a non-resident and sell a property, there is a retention for the buyer of 3% of the purchase price.
After that, you should declare in 3 months after the retention if you have obtained a capital gain or not.
That is calculated of 24.5 % of your gain, if it is more than the 3% of the price you should pay the difference. If it is less, then apply for refund.
Purchase price: 100.000 euros
Selling price: 120.000 euros
Retention 3% x 120.000 = 3.600 euros
Capital gain: 120.000-100.000 = 20.000 *24.5%= 4.900 euros
You should pay 4.900 -3600 = 1.300 euros
What is the Spanish estate tax policy?
Regardless of your residence position, if you have a Spanish property that is not your main home and you are not renting it out, the Spanish deem a notional rental income to arise, and you should declare it among your NON-RESIDENT TAXES. This is generally calculated as 1.1% of the official value of the property (valor catastral) if the value has been revised during the previous 10 years, or 2% if not. This income is called imputación de rentas inmobiliarias and, even though it is not actual income, it is taxable in Spain. Any such income is added to the rest of general income and taxed at the scale rates for residents, a flat rate of 19% for non-residents who live in the EU/EEA, or 24% for those resident outside the EU/EEA.
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