Taxation When Acquiring a Property in Andalucía

There are different taxation rates to consider when buying a property in Spain. Whether you are buying a new property from a developer, or a resale property from a private individual taxes will vary slightly from region to region. In Andalucía specifically, the taxation breakdown is as follows:

1A. Re-Sale Properties

There is a Transfer Tax (ITP) for a re-sale property that you are obliged to pay is currently set at 3 different Rates:

• At 8% up to a price of €400.000*
• At 9% up to €700.000
• At 10% from €700.001 upwards

* Reduced Tax Rates

For purchasers under the age of 35, the transfer tax is 3.5% providing the property value is less than €130,000 and the property purchased is to be the primary residence.

For disabled purchasers, the transfer tax is 3.5% providing the property value is less than €180,000 and the property is to be the primary residence. If the property is purchased by a real estate professional or firm, the transfer tax is 2%.

1B. New Properties

There are two Taxes on the purchase of a new property, or a property in the course of construction from a promoter, developer or habitual trader; VAT (IVA) which is currently at 10%, plus Stamp Duty at 1.5%.* Note that the VAT is normally payable on every amount paid to the promoter, developer or habitual trader. The Stamp Duty is only paid after completion has taken place, on registering the purchase deed.

* When purchasing a property with a mortgage there will be another tax applicable called Stamp Duty 1.5% on the mortgage liability.

1C. Plusvalia (Impuesto Sobre el Incremento del Valor de Los Terrenos de Naturaleza Urbana)

This tax is paid by the vendor. It is a local capital gains tax on the deemed increase in value of the land between the dates of the last and present transfer. Each Town Hall sets its own basis of calculation and this is reviewed periodically.

Property Taxes/Local Taxes i.e. Council Taxes

This group of taxes will apply once you are the owner of the property.

2A. Annual Rates (Impuesto sobre Bienes Inmuebles)

This is the main local property tax affecting owners of properties in Spain payable yearly to the Town Hall. The amount of the tax is calculated by reference to the “valor catastral” (official value of the property) registered in respect of all properties in Spain. The percentage charged varies from area to area.

2B. Rubbish (Basura)

A local tax related to rubbish collection to be paid to the Town Hall every 6 months.

Personal Spanish Residency Taxes

A person is resident for tax purposes in Spain if he is physically present in Spain for more than 183 days in any calendar year.

3A. Income Tax (Impuesto sobre la Renta de las Personas Físicas)

Non-residents are also liable for imputed income tax on their property in Spain. This tax is calculated on the basis of 2% or 1,1% (depending if the value has been recently revised) of the “valor catastral” (rateable value) of the property.

The tax rate for 2017 and 2018 are the following:

2017

Residents in UE, Norway and Iceland: 19%

Rest of taxpayers: 24%

2018

Residents in UE, Norway and Iceland: 19%

Rest of taxpayers: 24%

Income and Wealth Taxes are payable in arrears, for example the tax due for the tax year 2016 is paid in 2017, before the 31st December.

3B. Capital Gains Tax (Impuesto sobre Incremento de Patrimonio)

Non-residents pay capital gains tax on profits arising from the sale of their Spanish assets. The tax is based on the difference of the value of the property when it was purchased and the value on its sale. As a general rule, the authorities require that buyers from non-resident sellers deposit 3% of the purchase price with the Spanish Tax Authorities.

The tax rate for 2017 and 2018 was 19%.

3C. Wealth tax (Impuesto sobre el Patrimonio)

Non-residents are also liable for wealth tax for all the goods located in Spain when the value of all these goods exceeds 700.000 Euros. If the value of all the goods in Spain does not exceeds 700.000 Euros, non-residents do not have to pay taxes for the Spanish wealth and do not have to issue any tax form. The tax rate will depend on the value of the goods.

The purchasing of property in Spain is a regulated process and it is highly recommended to use a qualified Spanish lawyer that speaks your language. The lawyer will ensure that the property fulfils all legal requirements, is free of any outstanding debt, and that your interests are protected at all times throughout the purchasing process until you sign the Title Deed.

We highly recommend Gomez Villares & Atencia for any real estate transaction. They are a respected law firm with headquarters in Malaga and offices distributed across Spain and the world. As a Domus Venari client your initial property advise is complimentary.

For a step-by-step breakdown on the buying process, please refer to our 5 Simple Steps to Your Dream Home in Spain.