Buying a Spanish property will normally be contained in a private contract with a deposit of around 10% payable which is binding by law. It is possible to agree a contract where either party may change their minds at a financial cost. The private contract should contain details of the agreed deposit payment, purchase price and details for payment of the outstanding balance of the agreed buying price plus any additional extras and your intended completion. A Notary will prepare the official contracts and make sure it complies with Spanish regulations. If there is common ownership a Community of Owners must be established through which community charges can be shared. If your property is contained in an apartment block then the law will relate to the Horizontal Division and this should be clarified, especially in new developments. Any property sale or purchase in Spain should be registered in the Land Registry and it’s important to make sure any relevant taxes are paid before this is done.
find an abogado [Spanish lawyer] before you sign anything or pay any deposits to anybody. An abogado will charge from around 1%. of the purchase price, this is great value, your abogado will look after your financial interests, and give you peace of mind, a very valuable commodity when buying a house!
It is common practice for the sale and purchase price to be understated by Spanish sellers, enabling them to reduce their tax liability and reducing your stamp duty fees. However, you could be liable for Capital Gains tax on additional profit once the true price is declared and non residents will normally be expected to deposit 5% of the sale proceeds with local tax offices until any agreements are reached, and could have liability by both seller and buyer if the profits or in excess of set limits around Pt 2,000,000. (12,020.24 EUR)
You would expect to pay a total of around 10% of the purchase price for real estate in Spain. This could include VAT (Spanish IVA), charged at 7% of the official selling price (4.5% for the Canaries), and 0.5% for contract documents Land Registry is charged against a ratable table held by local authorities. There will also be a tax on the increase of the land your property lies on since it was last sold and should be paid by the vendor. Notary fees will also be included in the total costs.
All your Spanish property taxes will be based on the official price registered, not on selling prices and you would expect to pay under 1% annually, plus additional service taxes set by the local authority. Wealth tax charges apply for residents after 17m ptas (102,172.06 EUR) of net assets; if you don’t apply for residency you could be charged tax for all your net assets. Rate varies from fractions of a percent to over 2% depending on net
CAPITAL GAINS TAX
If you owned a property in Spain, and you want to sell it, you will pay Capital Gains Tax (PLUS VALIA) of up to 35% if you are resident and up to 20% if you are non resident.
The amount of tax to be paid will be the difference between the declared value when you purchased the property, and the declared value when you are selling the property.