By Netlex, your tax advisor in Marbella!
In this article we are going to try to present in a fairly summarized way those issues that must be taken into account when acquiring a property in Spain.
We are going to break down these questions into two main blocks:
- What are the previous steps that are advisable to review before signing the public deed of sale, to avoid future surprises.
- What are the steps that must be carried out after the signing of the public deed of sale, as well as what are the taxes to be paid in Spain.
These procedures can be carried out by the purchaser himself, or delegate this task to professionals specialized in the matter.
PROCEDURES PRIOR TO THE PURCHASE:
- Know the urban situation of the property in Spain , making the appropriate arrangements in the urban planning delegation of the town hall of the town where the property is located.
- Know the property registry situation in Spain , carrying out the appropriate procedures in the Property Registry of the town where the property is located. By requesting a simple note you have access to a lot of relevant information.
- Know the status of debts of the property , with the local council (IBI local taxes, garbage …), as well as with the community of owners . This type of information must be provided by the selling party.
- Require the seller the energy efficiency certificate corresponding to the property in Spain.
- For those cases in which it is necessary to apply for a mortgage in Spain , it is advisable to make a prior comparison of the conditions offered by various financial institutions. It should be taken into account that the bank will be the taxpayer of the tax on documented legal acts.
- The acquirer must be clear about the reason for which he wishes to acquire said property, if it is for a speculative reason, or for temporary or permanent residence. Having prior tax planning is very important, in order to optimize the payment of present and future taxes.
STEPS TO BE TAKEN AT THE TIME OF PURCHASE:
- Sign a public deed of sale at a notary’s office. Previously, it is possible to have signed a private sale contract, reviewed by a professional. The amount of the notarial fees depends on the amount of the operation.
STEPS TO BE CARRIED OUT AFTER SIGNING THE DEED OF PURCHASE AND SALE.
- The operation must pay taxes. Depending on how the operation has been “configured”, and the type of property, the type of tax to be paid could vary, depending on the type of property:
Purchase of a commercial premises in Spain:
If the premises are new , you would have to pay ( VAT ) Value Added Tax (21%), and ( AJD ) the tax on Documented Legal Acts (1.5%)
If the premises are of second transmission , you must pay ( ITP ) Tax on patrimonial transfers (between 8 and 10%, depending on the amount of the operation). It is important to note that if the buyer and seller are entrepreneurs (or companies), the operation could be subject to the payment of VAT at 21% (in this case, that money does not have to be disbursed, which means a cash saving), and there would be to pay also ITP (1.5%)
Buying a home in Spain:
If the home is new , you would have to pay ( VAT ) Value Added Tax (10%), and ( AJD ) the tax on Documented Legal Acts (1.5%)
If the home is second-hand , you must pay ( ITP ) Tax on property transfers (between 8 and 10%, depending on the amount of the operation).
It is important to note that the foregoing corresponds to general ITP rules, since there are some equally applicable exceptions, in which a lower rate may be applied.
As previously stated, tax planning in Spain is a key element to take into account before executing the operation, since the type of tax to be paid, and the applicable rate, could be reconfigured, achieving savings in cash.
- Finally, the public deed of purchase of the property should be registered in the Property Registry in Spain of the town where the property is located. The amount of the notarial fees depends on the amount of the operation.
- We advise making a communication of the operation to the Real Estate Cadastre (even in the event that said procedure could have been carried out by the notary), to make sure that the change will be recorded in the tax agency’s records.
From Netlex, law firm in Marbella