Taxes On Buying A House In Spain In 2018?
- Víctormanuel Paz
– You are not already selling your property but, it is already good to know. Maybe, knowing this, you will change the way you structure your purchase. Should you buy with bare ownership for your children and Usufruct for yourself? Should you buy within a company structure? Two taxes are due at the time of sale, whether this is done by a non-resident natural person or legal entity:
- The so-called ” Municipal Surplus Value ” (” Plusvalía Municipal “), a tax again of a local nature that in this case taxes the increase in the value of the land over the years. It must be settled by the seller at the corresponding City Hall within one month from the conclusion of the operation.
It should be noted with respect to this tax that there is great controversy in Spain regarding the way to calculate it by the municipalities, both because there might not be a real increase in the value of the land due to the crisis, and also because the formula used is not adequate. When the amount is high, it is very convenient to consult a professional to evaluate the convenience of filing an appeal before the Courts.
- And, again, the Non-Resident Income Tax : it is calculated on the capital gain obtained on the sale (sale value less acquisition value), which is taxed in this case at a 19% rate, be the seller EU resident or not.
Note that the buyer, when buying a property from a non-resident, is obliged to withhold a 3% on the sale price and pay it to the Tax Authorities within a month from the sale. The seller will subtract the amount withheld in the result of his Non-Residents Tax declaration, which must be presented in the 3 months following that former month. Should there be a difference in his favour, he is allowed to be refunded. Further reading on the subject: Property purchase in Spain with usufruct and bare ownership Spain property tax: What are the taxes involved in the purchase, holding, and sale of your Spanish property? This article: ” Part IV.
Tax aspects related to your Spanish property: acquisition, ownership and sale of your Spanish property Introductory paper: Why do you need independent legal and tax partners for your property acquisition in Spain? Part I.
Buying a property in Spain: Is a Spanish Notary enough? Why is an independent Spanish lawyer strongly advised? Part II. Buying a property in Spain as a foreigner : Are you allowed to buy a property in Spain as a foreigner? Do you need a Visa? Who is buying? How do you finance? Part III.
Legal due diligence on your Spanish property Part IV. Tax aspects related to your Spanish property: acquisition, ownership and sale of your Spanish property Part V. Inheritance, Estate Planning and Granting a Will in Spain For easiness of reading, it is split into five different articles: they could be read one after the other or separately.
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How much tax do you pay when buying a house in Spain?
Taxes on buying a Spanish property – Spanish property taxes vary depending on whether you are buying a new home or a resale property. New refers to a property that has never changed hands before – in this case; it is usually sold directly by the developer.
- Resale refers to homes that have been sold at least once before;
- This includes new properties that were bought by banks or taken on by them in case of default on mortgage payments, for example;
- Expect to pay between 8% and 11;
5% in taxes on a property purchase in Spain.
How much tax do you pay on buying a house?
Stamp Duty Land Tax (SDLT) is a tax paid by the buyer of a UK residential property when the purchase price exceeds £125,000. The stamp duty rate ranges from 2% to 12% of the purchase price, depending upon the value of the property bought, the purchase date and whether you are a multiple home owner.
What happens if you don’t pay your taxes in Spain?
When do I become a tax resident? – The short answer is that living longer than 183 days in Spain (including occasional trips out of the country) during any one calendar year makes you a tax resident. In addition, if your spouse and underage children live in Spain you may also be considered a tax resident in Spain even if you work or live in another country.
Do not get confused obtaining a Spanish residency certificate (RESIDENCIA issued by the Spanish Foreign Office) with a Spanish fiscal certificate (issued by the Spanish Tax Office) ; the first one shows you are on the register of foreigners kept by the Police and does not equate to tax residency, although the tax authorities may see it as evidence that you are tax resident if it is ever a matter of dispute.
The second one is issued once you comply with the Tax Office requirements. The declaration must be filed from the 6 th of April up to the 30 th of June of the following year. So, in 2022 everyone will be filing their 2021 tax returns and your 2022 tax return will be filed next year in the months of April/May/June.
The tax could be paid in two-stage payments by the end of June (60%) and the beginning of November (40%) of the same year if you do it by direct debit. Normally the taxpayer’s bank details are included in the declaration and the tax is automatically taken from their account.
Failure to pay tax can result in penalties of between 50% and 150% of the tax owed , plus interest. Late payment can result in penalties between 5% to 20% of the tax involved, plus interest.