This section gives details
of all the legal transactions, costs, and legal advice.
For an explanation of the stages involved in buying
a property in Spain, please see our buyer's
guide section.
Plusvalía
Plusvalia is the local municipal tax. It is based
on an officially assessed increase in value of the land since the
last time the property was sold. This can be quite small if purchasing
an apartment, but expensive on a villa with a large plot, which
has not changed hands for years. Find out the exact amount from
the town hall. Do not confuse this tax with the seller`s capital
gains tax on his profit on the sale.
Property Transfer Tax
Which of these two taxes is levied will depend on
the type of property you are purchasing; the property transfer tax
is levied on resale properties and is charged at 6 % of the new
escritura value (purchase price). But if you purchase a newly built
property from developer you will pay a different tax called IVA
(VAT) is charged at 7 % of the selling price -plus 0.5 % stamp duty.
Who Pays What?
The buyer is responsible for:
- Transfer Tax (or IVA plus stamp duty when buying
from a developer)
- Property Registration Fees
- Notary Charges
- His Lawyer's Fees
The seller is responsible for:
- His own Capital Gains Tax on any increase in escritura
value
- Plusvalia Tax
- Selling Agent Fees
(The normal custom is for the seller to pay the Plusvalia,
if however the buyer agrees to pay this tax, please remember that
it is registered against the land and you will have to pay if the
vendor fails to do so. This tax is often not demanded until some
time after completion).
New Properties
In the case of a new property, ask the seller to show
you the Declaration of new construction (Declaración de Obra
Nueva) together with a copy of this amount the Declaration of alteration
of property of an urban nature (Declaración de Alteración
de Bienes de Naturaleza Urbana), which both demonstrate that the
property has been registered for eventual payment of I.B.I.
Withholding Tax
If you buy a property from a non-resident person
or a company, you must withhold 5% of the purchase price. The tax
office (hacienda) make it the buyer`s responsibility that this amount
is paid to the tax authority on account of any liability by the
vendor to Capital Gains Tax.
Also remember that if there are any debts, outstanding
mortgages, unpaid Community fees, etc., then you should make sure
that these are paid. If you purchase an apartment in a block or
townhouse in a urbanization, ask for a certificate from the association
checking that the latest receipt for the community charges (“gastos
de comunidad”) was paid, and there are no charges outstanding.
Buyer's Guide
Please see our buyer's
guide section for information on the stages of the buying process.
Raising the finance
Please see our mortgages
section for more information.
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