We are often given the idea of making real estate property trades, but taxes that need to be paid are unknown for both purchaser and seller. At this post, we will explain which are those taxes needed in property trading in Spain.
First of all, taxes for the purchaser part would be:
If the purchase is to an individual, Transfer of Assets Tax (ITPAJD) is returned, which is the responsibility of the purchaser, and is settled on the basis of what is declared as the sale price at the initially 7% rate. However, after 10/2012 law, of December 21st, on Fiscal Measures, Administrative and Financial Management, and Organization of the Generalitat Valenciana, it was raised up to 8%.
Then, it suffered from a increasement again, from 6th August of 2013, the legislative decree 4/2013, of the Consell, which establishes urgent measures for the reduction of public deficit and the fight against tax fraud in the Valencian Community, modifies the 13/97 law of 23rd of December of the Generalitat and establishes as a general rate 10%.
On the seller side, in the case of urban real estate (rustic ones are not taxed for this concept), the transmission is also subject to municipal tax over the increase in the value of urban nature lands (former Plus-Valía), which must be paid in 30 days from its signing, its quantity varies depending on the municipality and the date of acquisition and sale of the property, the city council will calculate it with a simple copy of the deed.
Now then, if it is a foreign seller and does not prove his tax residence in Spain, the purchaser is obliged to retain and pay the 3% of the sale price in the tax office (Hacienda). The seller is responsible for the Real Estate Tax (IBI) of the current year and must be aware of the previous ones.
If the purchaser is going to buy the house and requests a mortgage from his bank, more expenses must be added:
Home valuation: the bank requests a valuation to know the value of the home and the percentage that can be granted. If the requester is Spanish, or resident in Spain, the bank will usually be able to lend 80% of the purchase price, and if the client is not a resident in Spain, he will limit the mortgage to 60% or 70% depending on the nationality and its debt capacity. The valuation costs approximately between 250€ and 600€ depending on the type of property. That valuation is valid for 6 months from the date of issue.
The opening commission can reach up to 2% of the capital depending on the agreement with the bank. IAJD (Tax on Documented Legal Acts).
This tax is paid whenever a notarized document is signed, which must then be signed in the registry. Since November 2018, a law decree became effective that requires banks to pay this tax.
The notarial expenses for the granting of the deed are assumed by the bank since June 2019.
Once the property is deeded, it must be taken to the property registry to sign it. This expense must also be assumed by the bank since June 2019.
The bank has its own agency which manages the tax payment procedures and documentation process. This expense must also be assumed by the bank since June 2019.
These are the direct taxes that are requested when buying and selling real estate assets.
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