Iva On Property Sales In Spain?
- Víctormanuel Paz
New properties – You are liable for two taxes when you buy a new-build property in Spain:
- VAT (IVA in Spanish) levied at 10% of the purchase price. For example, if you’re buying a new-build villa in Marbella that costs €950,000, you are liable for the payment of €95,000 for VAT.
- Stamp duty (legal documentation tax/ AJD in Spanish) at 1. 5% of the purchase price. In the above villa example, you would have to pay €9,500 in AJD.
Between them, VAT and AJD add 11. 5% to the cost of buying a property in Andalusia.
How much is IVA on estate agents fees in Spain?
Withholding of 3% of the price In property conveyance, obtaining a gain is considered as taxable income. The gain is determined by the difference between the conveyance value and the acquisition value. When the seller is a natural or legal person that is not resident in Spain, the acquirer is under obligation to withhold a percentage of the purchase price, a percentage which is set by law and at this moment in time is fixed at 3%, and the acquirer must pay this sum to the Spanish Treasury within a maximum period of one month, by way of a down-payment for any possible increase in the seller’s equity.
- When a loss of equity is produced or when the amount of the withholding is greater than the amount the seller must pay in Capital Gain Tax, a refund can be requested by submitting a specific form for this purpose to the Spanish Tax Office;
If the Spanish Tax Authorities do not challenge the values recorded in the statement or open an inspection, the withheld amounts (or those paid in excess) will be paid back in a period of approximately ten months as from the date of sale. Nevertheless, for the Tax Authorities to authorise a refund, the tax payers must have submitted their annual income returns as a non-resident and be up-to-date with all payments.
- As part of the services we provide to the seller, and at no additional cost, at Vicente & Otaolaurruchi we will submit your tax returns, request any refunds that may apply, and represent you before the Tax Authorities should they require any further information;
Plusvalía Tax This is a municipal tax that is calculated on the basis of the increase in value of the land on which the property is located. The law holds that the Plusvalía Tax must be paid by the seller. The factors determining its amount will vary from one Town Hall to another, but they mainly come to the location and surface area of the plot of land, the percentage of mutual share and the years that have passed since the last conveyance.
Lawyers’ fees In general, they come to 1% of the sale price, plus current VAT. These fees must be agreed at the start of the contractual relationship and not increase throughout that relationship, except where the initial assignment undergoes considerable modifications at the client’s express request.
The lawyer’s professional fees are an expense that can be deducted when calculating the Capital Gain Tax associated with the sale. Our lawyers do not charge by the hour or number of meetings, for documents and communications sent, or for visits, as experience has shown us that, in those cases, if we applied the rates recommended by the Bar Association, the costs for the client would rise considerably.
Our minimum fee in any case would amount to 1. 500 Euros plus VAT. Estate agents’ fees These usually range from 4% to 7% of the sale price, plus VAT at the current rate of 21%. The estate agent’s commission is paid when the deed is signed, once the total sale price has been received.
This cost can also be deducted when calculating the taxable Capital Gain. Capital Gain Tax As we have already mentioned, the gain obtained through property conveyance is considered as taxable income. The current rate is 19% for residents in any of the countries of the European Union, plus Iceland and Norway.
- The rate goes up to 24% for tax payers resident in the rest of the countries;
- The net profit is basically obtained by calculating the difference between the purchase and sale prices, which the deductible expenses will already have been added to and subtracted from, respectively;
Application of a corrective index (indexation) to the resulting purchase value was abolished as from 1 January 2015. For homes acquired before 31 December 1994 there is a special transitional arrangement that enables certain reductions to be applied when calculating the CGT.
- You can read more about it in this entry of our blog Energy performance certificate In compliance with European directives on energy and environmental issues, the owners of existing homes must provide potential buyers with the property’s energy performance certificate, which must be issued by a qualified technician;
The following, among others, are excluded from this regulation’s scope of application: a) Properties with a useful surface area below 50 m 2. b) Properties that are used for less than four months a year, or which are inhabited for a longer period of time, but whose energy consumption does not reach 25 % of what its use would normally be for a whole year.
- Do you still have queries on this subject? Have a look in the FAQs about sale of real estate in Spain;
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How much tax do you pay when buying a property in Spain?
Buying property tax: How much is buying property tax in Spain? – Purchasing a property in Spain involves the payment of different taxes, ranging between 8% and 11. 5%, whether the property is newly built, generally sold by banks or construction companies, or the property has already been owned by another person, a resale. .
What fees do you pay when selling a house in Spain?
Costs and fees for selling a house in Spain As the seller, you can expect to have to pay: Estate agency commission (typically between 3-6%) An energy performance certificate (between €150-€500) Capital gains tax if you are selling for more than you the price you originally paid (see below).
What are the costs when selling a property in Spain?
I get asked many times what the costs are for buying a property in Spain. When buying a Spanish property there are both costs for the buyer and seller. However, there are uncertainties as to which costs belong to the buyer and which to the seller. There is no fixed fee when it comes to selling a property in Spain as there are many factors that influence the amount of taxes to pay.
How does IVA work in Spain?
What is the sales tax in Spain? – In Spain, there is a sales tax that is called “IVA” or VAT (in Spanish “Impuesto sobre el Valor Añadido), a tax applied on retail sales or services provided by professionals. Basically, the vast majority of purchases (big and small) you make on a day-to-day basis are taxed with this sales or VAT tax. .
Is there VAT on estate agent fees?
How Much Are Estate Agent Fees in London? – Estate agent fees can vary according to a range of different factors. Property sellers today are no longer restricted to using conventional high-street estate agents to sell their homes. There are now other options, including online estate agents and even apps that aim to cut out the middle man and enable homeowners to sell their properties directly to potential buyers.
These other options might sound tempting because they circumvent those pesky estate agents’ fees. But those fees are usually a small price to pay for the peace of mind that comes with using a reputable estate agent to handle your property sale.
According to TheAdvisory, a house-selling website, the average estate agent fee is 1. 42% of the final selling price of a property (including VAT). Charges like these that agents calculate as a percentage of the final selling price are known as a commission.
42% is the average commission rate, but this number can vary. Some estate agents charge a commission of less than 1%, while others charge as much as 3. 5% of the final sale price. Before 2016, estate agents would often quote their fees without VAT taken into account.
It was left up to the seller to factor in the 20% VAT rate. However, the rules have changed. Any quotes presented to you should now include VAT.
Who pays agency fees when renting Spain?
A long staircase to climb till finding your rental appartment After 20 years of advising foreign property investors in Spain and having worked in other sectors, we have listed some controversies over Spanish rental agreements that may surprise foreign investors or future tenants. In this series of articles, we will present some of them. We will start the series with the following topic: do I (as a tenant) need to pay the agency fee when renting an apartment or a house? To answer this question (from the tenant perspective), please, fill in the following questionnaire with a simple YES / NO answer:
- Did the landlord hire the agent?
- Is the service provider acting for the landlord not for you (the tenant)?
- Is the agent acting against you, in the sense that he’s putting your offer in competition to raise the price?
- Is the agent following the instructions of the landlord (not yours)?
- Does the agent only preserve the interests of the landlord during the negotiation of the lease conditions?
- Does the agent require bank deposits from you, corporate guarantees and a pledge on your savings for your kids’ college in order to consider you eligible for the lease?
If you have answered “YES” to all questions above, it is clear that the agent is not working for you (the tenant), but for the landlord. You are not the agency client. Then the only logical (ironically speaking) consequence is that you (the tenant) should pay the agency fee and not the landlord. Strange, isn’t it? That is out of any logical explanation, it is absurd, but the market practice is that the tenant pays the fee of the agent who markets the apartment.
Normally the fee is 10% +VAT of a one-year lease. No one has been able to break this circle, and there’s little hope that the Spanish rental agreements will change in the future as long as an agent is involved in the lease of a residential real estate.
This situation responds to a market of atomized ownership dominated by a myriad of private owners. However, the growing number of institutional investors on the residential lease market and the increasing use of online search mechanisms shall tend to mitigate this. That includes 3 main elements:
- Stamp duty of the contract (tax). This is a small variable tax (40€ – 60€), which depends on the annual rent. According to the law, the tenant is obliged to pay.
- Cash-in at the administration of the one or two-month rental deposit the tenant has made. The service provided by the administration is free of charge. Cashing-in the deposit does not have any cost. Legally speaking, this is a duty of the landlord. Therefore, if the agent wants to charge somebody the trip to deliver the deposit at the administration, it should not be the tenant but the landlord.
- Lease contract draft. It is an unacceptable but common practice that the landlord requires the tenant to sign a pre-drafted contract. The contract, most of the times, is a template drafted by the agent following the templates of the associations of realtors or property managers.
- And perhaps one day, the service delivered by a good agent (bringing in a good tenant is a proposal with real added value) will be paid only by the recipient of the added value: the landlord;
- Final remark : In a number of situations, the agent will also say to you that you must pay for the “legal” costs of the lease;
Those templates contain all and any possible exclusion of rights for the tenant and are pro-landlord. Moreover, they will ask the tenant to pay for preparing the contract. The standard fee for this abuse goes from 200 € to 400 €. Please have in mind the following:
- Refuse this abuse.
- Only the lawyer can draft contracts with legal guarantees. Unless the agent is also a lawyer, he cannot do that.
- Lawyers can only accept to act for both parts of a contract negotiation if both parts accept it and there is no conflict of interest. There is a “per se” conflict of interest in such situations.
- You must hire a lawyer who will represent you in the rental procedure. A good one will probably cost more than 400€, but will defend your interests not the rights of the landlord.
- Spanish rental agreements are one of the main sources of litigation. Drafting a good lease contract will save your time, money and nerves!
Read our blog to find out more about the Spanish rental agreements!.