In this article we will consider the taxes involved in the purchase or sale of a property in Spain by an individual.

The situation is somewhat different, and will require additional advice and involves other taxes, when dealing with a company.

When buying or selling a home in Spain it is important to estimate the taxes you will have to pay, not only when you actually purchase your property, but also other local taxes and housing rates which are paid on a yearly basis by all home owners in Spain.


Taxes when you buy a home

As a general rule, the overall cost (including tax and fees) of purchasing a property in Spain is normally around 10% of the value of the property you are buying.

TPO - Transmisiones Patrimoniales Onerosas

If you are buying what is referred to as a re-sale or second-hand property, you will be required to pay this tax.

The tax rate is 7% and it is applied to the purchase price agreed.

IVA - Impuesto al Valor Agregado (value added tax)

Buyers of brand new houses in Spain are liable to pay 7% IVA, plus an extra 0.5% stamp duty.

However, if instead of buying a home you buy land, commercial premises or a parking space in a garage, the IVA payable rises to 16%.

Taxes payable when you sell

When selling property in Spain, you are liable to pay a tax, commonly known as capital gains tax.

The capital gain is determined by the difference between the sale price and the original purchase price paid.

The capital gain obtained when a property is sold in Spain is taxable through the IRPF scheme (personal income tax) or the IRNR scheme (tax for non-residents) depending on whether the seller is considered as a tax resident in Spain.

IRPF - Impuesto sobre la Renta de las Personas Físicas (tax for residents)

If the seller is a Spanish tax resident, according to the Spanish tax system the capital gain obtained when a property is sold is liable to be taxed through the IRPF, the personal income tax for residents.

The tax rate depends on the period of time the seller has owned the property. If this is for more than a year, the rate is always 15%.

However, if the property has been owned for less than a year, the tax rate applied can change from 18% up to 45%.

It is also important to note that the longer you own a property, the less capital gains tax you will have to pay.

IRNR - Impuesto sobre la Renta de No Residentes (tax for non-residents)

If the seller is not a Spanish tax resident and pays taxes in another country instead, the capital gains tax paid when a property is sold is 35%.

Usually, the buyer withholds 5% of the total purchase price to ensure payment of the tax by the non-resident. In effect, it is an advance deposit.

The amount retained at the time of the sale is payable once everything has been presented to the local tax registry office and the new deeds are available.

IIVTNU - Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (local council tax)

This is commonly known as Plusvalía. It is a local tax established by councils.

The local authorities determine the tax rate applicable, which can be as high as 30% of the value of the land transferred when the property is sold. The tax is calculated according to the value of the property and the number of years it has been in the ownership of the vendor.

More information:

Alex Chumillas
Tax Expert - Economist
Member of The Col·legi d’Economistes de Catalunya
Member of The British Chamber of Commerce in Spain

aamat@economistes.com
Telephone: +34 934 442 137
Mobile: +34 667 663 521