Purchasing a property incurs the following one-off taxes (Example property valued at 150.000 euro)
1. Land Transfer Tax:
7% of the “escritura” value is payable when buying privately: €10.500.00
When buying through a private resort, 1% documental legal act (A.J.D.) €1.500.00
Plus 7% VAT of the purchase price €10.500.00
2. Capital Gains tax:
The vendor is legally obliged to pay approximately 25% of each fixed local authority assessment of capital gains tax on the property. Although as a rule, there is an arrangement made between the vendor and purchaser, it is the property itself that incurs the tax.
788 sqm Property
Date of purchase:10.11.1982
Date of sale: 06.04.1995
Local Authority estimated value of the property € 12.332
12 years (i year free)x2.30= 27.60%
27.60% of estimated value= € 3.404
23% of capital gains= € 783
The percentage depends on the length of the ownership as well as the “Ordenanza Municipal” (official Local Act)
3. Property gains tax
A non-resident purchaser is legally obliged to withhold from the vendor 5% of the declare purchase price and to pay this sum into a property gains account at the local tax office. This tax can then be reclaimed by the vendor on presentation of his income tax form. If the vendor has owned the property for ten years or more, the purchaser does not need to withhold this tax.
Taxes payable annually during period of ownership NON-RESIDENTS
0.2% of the escritura value (in this case € 150.000)= € 300 (moren than euro 167.130 escritura value will be 0.3%)
2. Income tax
25% of the gross rental income.
If the property is not rented out, the owner must pay 0.5% tax of the rateable value. Ex. €60.000, tax basis:2% of the value=€1.200 and from this 25% (only for built plots)= €300.
3.Local Property Tax (Council Tax)
0.85% at the rateable value set by the land registry. The land registry calculates this amount by estimating the land value plus the property value and it is usually the half of the escritura value.
4. Refuse Collection.
Sometimes its included in the local property tax but in other cases management legal companies (gestorias) charge an average similar to this due to the value property exampled.
Incl VAT 1 Owner
Without renting 1Object – €50
With renting 1Object – €70
Up 2 Units – €85
Incl VAT 2 Owners
Without renting 1Object – €85
With renting 1Object - €105
Up 2 Units – €120
RAISING FINANCE IN SPAIN
The following conditions apply when applying for finance in Spain:
- It is possible to raise up to 60%of the purchase price with a repayment period of up to 10 years through a Spanish bank, assuming that the certificate of income is accepted by the bank as sufficient. All cost are payable by the purchaser.
- The credit repayment period amounts to a maximum of 10 years whereby, as a rule, the borrower should not have reached the age of 60 during this time. Should the client reach this age, there must follow an individual consultation with the bank.
- The finance is made in Euros
- The interest rate is variable and is based on the EURIBOR interest rate plus a bank margin.
- Repayments are made in monthly instalments.
- Additional credit costs amount to 4%and are calculated individually. These costs are to be paid to the bank before the credit agreement is signed.
- When applying for credit, the applicants must provide their last 3 months salary slips, or in the case of self-employed persons, the last income tax return as well as a general bank statement.