BUYERS GUIDE

V.A.T. 7% up to a value of 400,000 € and 8% onwards.
Commercial premises and plots are taxed at 18%.

We appreciate that buying a property overseas can be a minefield therefore be sure that as our client, every step of your purchase will be managed in a professional and friendly manner.

Once you have chosen the property you wish to acquire, the next step is to enquire on features of the property; plans, terms of payment and extras if any. At this stage you might require the assistance of a qualified Lawyer who will help you and clarify any points and costs involved.

BUYING A NEW PROPERTY

Most developments require the purchaser to make payments during the building process making a final payment upon completion and final handing over of keys and Title to it. These payments in advance range, depending on the development you have chosen, from 30 to 50% of the price, payable during the construction and balance at completion.

It is common that the amounts  to be paid in advance be distributed the following way:

- A small deposit of about € 6,000 as a reservation fee to reserve the property for which a receipt will be drafted stating the exact unit, total purchase price and payment terms.

- A further amount is paid at exchanging of the private contracts normally 15 days after reservation.

- The balance up to the 30 or 50% will be paid during construction, distributed in periodical installments.

- Finally the balance of the purchase price is paid at completion upon  the signing of the Title Deed.

BUYING A RESALE PROPERTY

- Most vendors will require from 10 to 20% of the purchase price to be paid at exchange of contracts and balance at completion.

- The balance will be paid by the purchaser before a Notary Public where the sale will be formally completed in a Public Title Deed granted by the vendor in favor of the purchaser.

TAXES TO BE PAID WHEN TRANSFERRING A PROPERTY

First of all it is important to distinguish if the property is a first transfer, that is bought from a Developer, in which cas it will be subject to V.A.T., or whether it is a second hand property in which case it will be subject to PROPERTY TRANSFER TAX (IMPUESTO DE TRANSMISIONES PATRIMONIALES).

As far as the Property Transfer Tax is concerned it will be charged  at a  7% up to the amount of 400,000 € and at an 8% from the said value onwards.

TAXES TO BE PAID BY A NON RESIDENT INDIVIDUAL

1) I.B.I. (Annual Rates) and Rubbish collection: This is paid yearly to the Town Hall and the amount depends on the value of the property.

2) Income Tax: Despite what the name suggests this is a Property Tax which is paid yearly to the Inland Revenue Office and the amount depends on the Rateable value of the property to which the rate of 1.1% or 2% is applied depending on the date of the last revision and then a further 24% will be applied to this figure.

TAXES TO BE PAID BY A NON RESIDENT COMPANY

1) I.B.I. (Annual rates) and Rubbish collection: Same as for Individuals.

2) Special Tax for non resident companies: There is a special tax which amounts to 3% of the rateable value of  the property which must be paid yearly to the Spanish Inland Revenue Office.

TAXES TO BE PAID BY A SPANISH COMPANY

1) I.B.I. (Annual Rates) and rubbish collection Tax: Same than above.

2) Company Tax: The general rate is 30% although there is a reduced rate of 20% for a profit of up to 120,000 € and 25% for the rest as long as the benefit is not higher than 5,000,000 € and the Company does not have more than 25 employees.