Get free and comprehensive tax advice when buying or selling a property in Spain

Spain is a central state, nevertheless, the autonomous regions have a differently strong weight and partly also their own financial administration. The respective regions are subdivided again into provinces and municipalities. This means for the real estate acquirer that he deals with different tax laws and tax management systems.

Basically the central state fixes the tax laws. Nevertheless, from region to region there are partly considerable differences concerning the calculation basis and the level of the rates of taxation.

Our Tax Advisors will give you comprehensive advice in detail of all taxes which are going to be paid by you, the property purchaser, the property owner or the property seller in Majorca.

Inheritance Tax: property owners might think about a lifetime mortgage to reduce spanish inheritance tax. But also buyers of a Property in Spain should know everything about the best solutions to significantly reduce spanish inheritance tax.

As well as we may admire the Spanish relaxness from northern Europe stress, in the case of a property purchase this laissez-faire mentality often makes the life difficult to people from abroad acquirers. Therefore it is advisable in general to get professional help on site by the property purchase as well as on the financing of a Spanish real estate. Also with regard to the tax charges You should seek the advise of a skilled tax adviser, because a property purchase in Spain is not as easy at it seems, especially buying off-plan or a second hand home.

With the acquisition of the real estate there is either the Spanish VAT or "IVA" (with first acquisition of a developer) or the land transfer tax "ITP"payable for the buyer of the property. No matter which tax – they amount to 7% in both cases. The land transfer tax is to be paid within 30 days directly to the tax office. The VAT to the seller who will discharge this then to the tax office.

In the case when the property is purchased from a developer and the acquisition with VAT is given, there is one more stamp tax (AJD, Actos Jurídicos Documentados) at the rate of 1%.

In both cases notarial expenses and register fees still have to be added at the rate of approx. 0.7% (depending on the number of the pages in the notarial document).

As long as the real estate is in Your private possession, You are liable to pay an ongoing tax charge. The real estate tax (IBI, Impuesto de Bienes Inmuebles) is due to pay once a year to the municipality. The municipality fixes the rate of taxation and applies this to the cadastral value of the property. This cadastral value is also determined by the municipality and can be clearly lower in some municipalities than the market value of the real estate. The IBI is generally delivered to You by a courier to Your property adress and is to be paid within a period stated in the writing, in the cashier's office of the municipality. As a rule You can give to the municipality also a direct-debit authorisation of Your bank account.

Provided that You do not have Your tax residence on the Balearic Islands and own, hence, as Non-resident a property, You have to pay special taxes. The deadline to submit the declaration is the 31st of December of one year. Currently there is no reminder following from the authorities if the tax return is not handed in on time.

Calculation basis for the special taxes is the value of the property. As a rule the higher value from either the notarial document (Escritura) or the cadastral statement is taken into account. Indeed, it is though usual to take even the lower cadastral value, to save taxes. An expert on site can give assistance with the specification of the value on site.

First the yield of this real estate (although it is not rented) is fictitiously taxed. In addition 2% of the cadastral value are attached as rental incomes. Expenses cannot be offset. 25% of this calculation basis are settled as an income tax. Should You have the intention to rent the real estate, You need a "touristic" licence. Then a taxation follows at the rate of 25% on the profit of actual income and expenses.

Beside the yield the assets are also taxed in Spain for non-residents. Also here is valid general (or lump sum) procedure. The rate of taxation amounts to at a minimum of 0.2% and can rise according to the value of the assets up to 2.5%.

Real estate sellers can be pleased about excellent profits. After all, the value of a lot of holiday properties has doubled, even trebled during the last years. It is understandable that the Spanish state wants its share from this gain.

When selling the property, the capital gain of the seller of the Spanish real estate is taxed at the rate of 18% and is to be announced within four months.
A special regulation is valid for non-resident also here. Three percent of the notarial purchase price are NOT paid not to the vendor (Non-resident) by the buyer, but under the tax number of the vendor to the tax office. Then this amount is credited later on the income tax of the seller.

Furthermore many municipalities raise a capital appreciation tax (Plusvalía municipal). It is to be borne by the seller by law, however, it is often shifted to the buyer in the sales contracts. The height of the tax is depending on the municipality and the duration of the owner's time of the seller.