We always recommend that you seek professional financial and legal advice!
It is important to receive an estimate of all of the taxes you will pay before you buy your property in Spain, not only the initial purchase taxes but also local taxes and housing rates that are paid annually. Property taxes in Spain are based upon the value of the house and the area you live in. The following information provides an approximate guide to all the tax expenses you will come across when deciding to buy:
Resale Purchase Tax
Purchasers of re-sale properties are required to pay the – Impuesto de Transferencia de Propiedad – transfer tax which is currently 7%
New Properties Purchase Tax
Buyers of new property are liable to pay 7% IVA (VAT) if the house is finished or is being built at the time of purchase; in addition they are required to pay an extra 0.5% stamp duty.
Increased Patrimony Tax Payable to Spanish Treasury
When a property sale takes place in Spain a capital gains tax must be paid by the seller. According to Spanish fiscal law the buyer withholds 5% of the total purchase price to make sure that the seller does not take the money and run! This amount represents capital gains tax on the profit made by the seller at the time of the sale.
The Capital gains Tax is payable to the Spanish Treasury and is 5% of the difference between the current sale price and the original price paid by the seller for non-residents & 3% for residents. Your lawyer can give you all the details and exact amounts for the above.
Sound Financial Advice
Hudson International are not financial or legal advisors and we would always recommend that you seek professional independent financial and legal advice when purchasing in Spain. For further information please see our Legal Services and Financial Services guides.
We will explain ALL of the costs associated with purchasing in Spain or buying Overseas Property and provide Spanish and UK based contacts, before, during and after your purchase and all issues will be handled efficiently in a manner you would expect from an organisation that makes customer service our highest priority.