Call us on : 952 83 18 38 / 670 78 98 58
August 28, 2009 - Posted By (Admin) in (Law)
Costs involved in a property purchase in Spain will usually be less than 10 per cent of the purchase price , but can go higher in individual cases. (for instance when a mortgage is needed)
You have two taxes and two fees to pay on the transfer of your property. The two fees are for the notarisation of the deed and for its registry in the Property Registry. The two taxes are the transfer tax and a sort of capital gains tax on the increase in value of the land, usually called the Plus Valia Tax. This tax is a municipal tax. The Plusvalia is normally paid by the owner, but owner and buyer are free to make arrangements of who will be paying this.
Notary: You pay the Notario a fee fixed by an official scale. The fee varies according to the amount of land, the size of the dwelling and its price, but le`ts say between 350euros and 600 euros.
Property Registry: Then there is a fee for the inscription of the property in your name in the oficial "Registro de la Propiedad". This will be a similar amount. Your lawyer or property consultant can tell you exactly how much these fees will be before you buy.
Transfer Tax: The transfer tax, called "Impuesto de Transmisiones Patrimoniales" (ITP) in Spanish, is 7 per cent of the value declared in the contract for private sales. If you purchase new property from the developer, this tax will be IVA (Value Added Tax) at 7 per cent too. In addition to this, you pay a documents fee, or stamp duty, of one per cent, so buying a new property will draw tax of 8 per cent.
If you buy a building plot without a house on it or a garage, you will be charged the regular rate of IVA, which is 16 per cent.
Plus Valía: The other tax on property sales is the "Arbitrio sobre el Incremento del Valor de los Terrenos", the municipal tax on the increase in the value of the land since its last sale. This is usually called the Plus Valía for short, and it can vary widely. In the case of an apartment or a townhouse in a new urbanisation, whre little land is involved and where there has been no real increase in value because such a short time has passed since it was developed, the tax can be very low. It will be much higher if you buy a house with several thousand square metres of land, which has not changed hands for 20 years and which has been recently re-zoned from rural to urban land, thus jumping greatly in value. The Plusvalia tax is usually paid by the vendor of the property.
This tax is based on the official value of the land, which is always lower than the market value, and it varies from 10 per cent up to 40 per cent of the annual incrase, depending on the lenght of time between sales and the town where it is located. The land is officially re-valued periodically for this purpose.
Do not confuse this Plus Valia tax with the non-resident`s 18 per cent capital gains tax on profits from the sale.
The PlusValia tax can be charged directly against the property itself, meaning that unscrupulous seller might promise to pay it and "forget", leaving the new owner to pay it.
Raquel Pérez
raquel@perezlegalgroup.com
Perez Legal Group
Centro Comercial Elviria, Oficina 6
29604 Marbella
Tlf: +34 952 833 169
Fax: + 34 952 830 262
