Tax Info

BRIEF REPORT ON FISCAL AND GENERAL OBLIGATIONS WHEN BUYING, SELLING OR RENTING A PROPERTY IN SPAIN

(Information provided for guidance only)

WHEN BUYING A PROPERTY IN MARBELLA

• First conveyance of a property, garage or storeroom: VAT(1) 10% is payable if the deed of sale is signed at the same time as the dwelling’s and includes no more than 2 garages and 1 storeroom, plus 1.2% of Stamp Duty (AJD(2)).
• First conveyance of garages and storerooms: 21% VAT payable if deeds are executed separately from the apartment plus 1.2% of AJD(2).
• Second conveyance of a property, garages and storage rooms: The Transfer Tax (ITP)(3) on a private sale is 7%. When the acquisition of a property is for resale by an individual person or corporate person, who carries out a business activity, ITP is 2%. If the seller and the buyer are both VAT taxpayers, they can waive the VAT exemption, so the transaction is subject to 21% VAT plus 1,2% AJD.

Important: check that the seller is up to date with the payment of local taxes (IBI Property Tax and Garbage Tax). In the event of non-payment, the buyer will be responsible, so he/she must retain said amount of the purchase price.

If the seller of the property is not a tax resident in Spain, the buyer of the dwelling will retain 3% of the price of the property and will be responsible for paying it directly to the Tax Office within a month from the date of purchase. The non-tax resident needs a Certificate of Registration in the Central Register of Foreigners, the NIE(5), identification number for foreigners. He/she may also be required to appoint a tax representative in Spain.

Additional purchase expenses:

• Notary expenses: it depends on the type of Title Deed, the number of buyers and sellers, on the amount of the transaction, if there is a mortgage, etc. For example: for a simple Title Deed, without a mortgage and for a value of 300,000€, a notary will charge about 850€. For a value of 500,000€, the fee will be around 950€.
• Land Register expenses: somewhat less than the notary fees.
• Stamp Duty: if a mortgage is established, the Stamp Duty (AJD) is 1.2% of the mortgage liability, which usually reaches approximately one a a half times of the loan principal.
• Municipal capital Gains Tax (Plusvalía(6)): according to the law, the seller has to pay this tax, unless otherwise agreed. This is a tax that is based on the increased value of the asset from the last property transaction and thus has to be paid at the time of conveyance. Should the seller not be a resident in Spain, then the purchaser is liable to pay this tax.
• Lawyer: around 1% of the value of the transaction plus applicable VAT at the current rate.
• Real Estate Agency Commissions: paid by the seller.

WHEN SELLING A PROPERTY IN MARBELLA

When selling a property you are taxed on the difference between the cost of acquisition and the selling price.

• If the seller is Spanish: in the Personal Income tax declaration, the seller needs to declare sale price, deducting costs of acquisition and renovations costs, if any and can be justified. The gain is included in the capital gains section of personal income tax and is taxes at the applicable rate.

• If the seller is a foreigner tax resident in Spain: the tax treatment is the same as for a Spanish seller.

• If the seller, whether an individual person or a corporate person, is a foreigner who is not a tax resident in Spain: The buyer must withhold 3% of the price in the Deed of Sale, which must be submitted to the Tax Office within one month from the date of signature at the notary. In the 4 months following the deed of sale, the non-resident seller will have to declare (modelo 210) the capital gain or loss and, if applicable, pay the taxes, deducting the 3% previously withheld by the buyer. Currently the percentage to pay is 19%. If there have been losses, you may request, depending on the case, the return of part or all of the withholding.

• If the seller is a Spanish company: taxes of 25% are paid on the profit obtained when it is integrated into the company’s income statement.

• When the seller is Spanish or a foreigner tax resident in Spain over the age of 65 years and has lived in the property for more than 3 years (that is, he transfers his principal residence): he/she is not subject to capital gains tax.

Additional charges on the sale:
• Municipal capital Gains: It taxes the increase in the value of urban land and is accrued by the increase in the value of the land since the last transfer of the property. According to the law,  this applies to the seller. It is possible to agree otherwise but the City Council will always make a claim against the seller in case of non-payment. If the seller is a non-resident, the responsability for payment is reversed and will always be the buyer´s. The City Council settles the Municipal capital gain once the cadastre receives the information about the sale from the notary.
• Lawyer: about 1% of the value of the transaction, plus VAT.
• Real Estate Agency Commissions: The amount previously agreed with the Real Estate Agency, usually 5% plus VAT.

The property must be up-to-date with payment of the Property Tax (IBI), the garbage tax, and the Property Owner Community fees.

ONCE THE PROPERTY IS PURCHASED

The Town Hall will issue the following receipts that can be direct debited to your bank account:

1- Property Tax (IBI): The receipt of this tax is annual, it accrues on 1st January each year and in Marbella it is payable between July and middle of September. Its value is updated every year in the Municipal Budgets. The IBI receipt contains the cadastral reference number and the cadastral value of the dwelling/garage/storeroom.
2- Garbage Tax: In this case it is a fee and the receipts are usually issued every 6 months.
3- Special contributions (if any).
4- Community of Owners fees: It is advisable to consult the Property Administrator who must issue a certificate that the property is up to date with community payments. The lack of this certificate, makes the buyer legally responsible for the fees due that correspond to the year of purchase and the previous three years of community fees.

OBLIGATIONS OF A NON-RESIDENTS AS PROPERTY OWNERS IN SPAIN
Annual tax for non-resident: The tax due on an imputation of a non-resident´s presumed annual income is 19% when the owner is a resident of the EU, Iceland and Norway. Otherwise, it is 24%. The calculation is made on 1.1% of the cadastral value when this has been reviewed in the last ten years. Otherwise, it is 2%. If there is no cadastral value, 50% of the acquisition value is used and 1.1% is applied.

Imputed Income is also paid by nationals and foreigners residents in Spain on their second residences and other assets located in Spain.

Any foreign company domiciled in a tax haven that owns a home in Spain will be subject to an annual tax of 3% calculated on the cadastral value. If you declare to the Public Treasury who is the ultimate natural person owner of the company, the 3% annual fee is not paid, but if the ultimate owner is a non-resident, you would have to submit the non-resident declaration (form 210).

RENTING YOUR PROPERTY
• Spaniards or foreigners who are tax residents in Spain: include the amount received as income from real estate in the annual personal income tax return (IRPF(7)).
• Non-residents: declare your rental income and pay taxes of 19% when the owner is a resident of the EU, Iceland or Norway. Otherwise, it is 24%.

(1) IVA: Value Added Tax (Impuesto sobre el Valor Añadido). The current Reduced Rate: 10%. General: 21%.
(2) ADJ: Stamp Duty (Actos Jurídicos Documentados).
(3) ITP: Transfer tax. (Impuesto de Transmisiones Patrimoniales).
(4) IBI: Property tax (Impuesto de Bienes inmuebles), levied by the town hall. Approximately 1% of the Cadastral Value.
(5) NIE: Identification number for foreigners (Número de Identificación de Extranjeros).
(6) Plusvalía: Capital GainsTax on the increase of the value of urban land. This municipal tax is levied on the increase of the value of property in the case of sale of plots, and on the land attributed to a dwelling as of the last conveyance.
(7) IRPF: Personal income tax (Impuesto de la Renta de las Personas Físicas).

Greenlife Estates offers this information as guidance with the intention of helping its clients. We are not responsible for the consequences that might arise from the information provided and recommend that the interested parties consult the Tax Authorities (Agencia Tributaria) or qualified entities and professionals.

We recommend consulting a legal expert for exact percentage rates of VAT, property transfer tax, stamp duty, capital gains and other income derived from real estate, as changes may occur.