1. Property Purchase Costs a) Resale Properties Transfer Tax (I.T.P.) scaled at 8%, 9% & 10% is payable by the buyer for the purchase of any real estate (villas, apartments, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties. If the “minimum fiscal value” of the property, as per the Regional Government, is greater than the price, then the minimum fiscal valuation applies: 8% is applicable up to the amount of 400,000€ or 30,000€ in the case of garages except those belonging to the dwelling and with a maximum of two; 9% is applicable to the amount between 400,000€ and 700,000€ or between 30,000€ and 50,000€ for garages; 10% is applicable to the amount exceeding 700,000€ or 50,000€ for garages. Example: For a property of 1,000,000€ Up to 400,000€ @ 8% = 32,000€ On 300,000€ (400,000€ to 700,000€) @ 9% = 27,000€ Excess 300,000€ (700,000€ to 1,000,000€) @ 10% = 30,000€ Total 89,000€ b) New Properties VAT is 4% (rising to 10% on 1st January 2013) STAMP DUTY is 1.2% These apply to any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader for BRAND NEW PROPERTIES. Plots of Land, Commercial Premises, & Commercial garage Spaces VAT is 21% STAMP DUTY is 1.2% for PLOTS OF LAND, COMMERCIAL PREMISES or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader. This covers virtually all NEWLY URBANIZED LAND PLOTS and NEWLY BUILT COMMERCIAL PREMISES. This only covers resale properties when the vendor falls into one of the above categories. 2. Notary Fees and Property Registry Inscription Fees Notary fees vary depending on the number of pages or complexity of the title deed (e.g. transcription of statutes, payment in stages, property partially finished, etc.). The property registry inscription fees also depend on the complexity of the transaction. 3. Municipal Added Value Tax (Plusvalía) This is an “added value” tax based on the increase of the Town Hall index value of the land only, from the prior purchase (made by the current vendor) to the present sale. It is usually not a significant amount with respect to apartments or townhouses, but can be more in the case of villas with large plots of land. The vendor is responsible for its payment, unless otherwise negotiated. As there are several variable factors used in calculating this tax, especially the length of time of ownership of the property, the amount payable can vary substantially and should be verified before proceeding with the purchase. 4. Summary The total official costs involved in purchasing a constructed residential property should be around 10% for resale properties or around 7% for new properties if VAT is paid on the purchase price. PART 2 - Other Costs involved in Owning Spanish Property 1. Local Rates or Annual Property Tax (IBI) Local rates are payable annually, and are calculated from the Cadastral or rateable value of the land assigned by the Spanish Tax Office. The Cadastral value takes into account the value of the land plus the value of the building, according to type, location, and usage. Upon this value, each municipal Town Hall decides on the percentage to be charged in respect of local rates. 2. Rubbish Collection & Water Rates (Basura & Agua) The rubbish collection rate is applied by the Town Hall according to the property and is payable every 6 months, the cost of which will vary from one location to another and from one type of property to another. Water consumption is calculated in cubic meters and is payable every 3 months. Payment can be made directly at the Town Hall or by bank with direct payment instructions. 3. Community Fees Individual properties that are not on an urbanization will not attract Community Fees. Generally speaking, regarding properties on an urbanization, there will be a Community of Co-Proprietors or Homeowners’ Association, which is a legal entity comprised exclusively of owners of apartments in a building, or villas on an estate. The purpose of the Community is to own and maintain the common elements of the building or estate in question, and each homeowner is obliged to participate in the expenses of the upkeep of the community areas and services on a prorated basis with the other owners. Usually, a homeowner’s percentage of the costs is fixed by the size of the apartment, or plot, divided by the total area of all the apartments or plots. A budget for the annual community expenses is presented at the annual general meeting of the homeowners, and they or their authorized representatives must approve the budget by majority vote of those present at the meeting. Expenses can vary substantially according to the services provided, and normally include salary and social security of the hall porter, common garden maintenance, lift maintenance, repairs to common elements, rubbish collection, water for watering community gardens, electricity for lighting communal areas, insurance, security, and administration fees. The President of the community must, by law, own a property within the complex itself and is chosen by way of vote by the co-owners. The President has no remuneration for this role. It is recommended that where it is an established community that you ask your agent to see the last three years of AGM reports. In the case of an individual villa in an estate of villas, community fees are often less since the private gardens and exteriors of such properties are generally not maintained by the community, and the community fees are limited to road and roadside garden maintenance, basic common service maintenance and security. 4. Insurance One should note that in an apartment building, the Homeowners’ Association is required to insure the building for its rebuilding cost. Therefore, the individual’s insurance policy the need not cover the entire value of the apartment, but only damages to its interior, its contents, and third party liability. It is also advisable to find out if the Community insurance is comprehensive or not. 5. Electricity Electricity is billed bimonthly. Minimum rates are applicable whether you are in residence or not and the minimum varies according to the amount of electricity your house could potentially use with all power and lights turned on. 6. Fixed-line Telephone The telephone bill is charged monthly. Standard rates vary according to the equipment installed. There are many local and national telephone companies that can offer substantial savings to those who wish to spend some time studying the market. ADSL broadband services are available virtually anywhere. PART 3: Taxes Some of the main taxes for non-residents in Spain include the following: The following taxes have been explained above: 1. Municipal Added Value Tax (Plusvalía): Please refer to Part 1 of this article ”Municipal Added Value Tax (Plus Valía)” 2. Rates or Annual Property Tax (IBI): Please refer to Part 2 of this article ”Local Rates or Annual Property Tax (IBI)” 3. Rubbish Tax (Basura) Please refer to Part 2 of this article ”Rubbish Collection & Water Rates (Basura & Agua)” The following taxes are detailed below. 1. Wealth Tax (Impuesto de Patrimonio) 2. Income Tax (Impuesto sobre la Renta) 3. Capital Gains Tax (Impuesto sobre Ganancias Patrimoniales Inmobiliarias) and Retentions 1. Wealth Tax Wealth Tax has been reinstated in Spain. The new Royal Decree 13/2011 of 17 September 2011 brought this tax into force once again and outlines the taxable amounts and their taxation rates. Those who are liable to pay Wealth Tax are individuals who are fiscal residents in Spain as well as non-residents who have assets on Spanish territory. In 2008 this tax was abolished and the last fiscal year for which it was due was the year 2007. The re-introduction of the Wealth Tax is initially only for the years 2011 and 2012 and changes have also been introduced so that only those in the higher wealth brackets are liable. Spanish Wealth Tax is based on the total net assets held on December 31 of each year and the tax rates range from 0.2% to 2.5%. Fiscal residents are liable for wealth tax on their net worldwide assets, while non-residents are taxed only on their net assets located on Spanish territory or taxable in Spain. The general conditions of the new Wealth Tax are as follows: · Wealth Tax will be applicable only for the tax years 2011 and 2012, and is to be abolished again on 1stJanuary, 2013 (and, as a result, the corresponding wealth tax returns will be filed in 2012 and 2013). · The minimum tax-free amount has been raised to €700,000 (previously €108,182.18, generally speaking). Therefore, individuals whose wealth is less than €700,000 are not liable to pay wealth tax. · Each resident may deduct the value of their main residence in Spain up to a maximum of €300.000 (previously €150,253.03). The tax rates applicable range from 0.2% to 2.5% as in the following table: TAXABLE TAX DUE REST OF TAXABLE BASE UP TO % APPLICABLE RATE BASE 0 0 167,129.45 0.2 167,129.45 334.26 167,123.43 0.3 334,252.88 835.63 334,246.87 0.5 668,499.75 2,506.86 668,449.76 0.9 1,336,999.51 8,523.36 1,336,999.50 1.3 2,673,999.01 25,904.35 2,673,999.02 1.7 5,347,998.03 71,362.33 5,347,998.03 2.1 10,695,996.06 183,670.29 and above 2.5 Wealth Tax is levied on an individual basis. When a property or other asset belongs to two or more individuals, each person will pay tax according to the percentage of the property and loans held in their name. In the case of married couples, if assets are shared by both spouses, 50% shall be assigned to each unless proof to the contrary is presented. 2. Income Tax a) Non-Residents (IRNR) Non-residents must pay Income Tax (IRNR) on income received through the ownership of property in Spain. There are two forms of taxation applicable depending on the source: · Income gained on property rentals: 24% on returns. · Derived benefit on own use of property: 24% of 1.1% of the rateable value of the property. General Note: We refer here to Property Income Tax. Different taxation applies depending on the source of non-resident income. b) Residents (IRPF) RESIDENTS in Spain must of course file Income Tax Returns and declare the income they receive, regardless of source. For tax purposes, one is considered a FISCAL RESIDENT if one resides in Spain over 183 days per calendar year, regardless of whether one is officially resident or not. 3. Capital Gains Tax & Retentions Capital Gains Tax for non-residents is set at 21% for 2012 and 2013, payable on profits earned on the difference of the property value between the year of purchase (purchase price plus costs) and the year of sale (sales price minus costs). Capital Gains Tax for residents for 2012 and 2013 is set at 21% for the first 6.000€ profit, for profit gained between the next 6.001€ and 24.000€ it is set at 25%, and for profit gained of over 24.001€ it is set at 27%. With respect to the sale of property belonging to fiscal residents in Spain, where the property is one’s permanent home, proceeds of the sale may be reinvested in another permanent residence during the two years before and after the sale of the prior property. If the total amount is reinvested in the new home, tax obtained for the sale of the previous home will be totally exempt. However, if only a part of the proceeds from the previous sale is reinvested, tax payable will be proportionally reduced. For the sale of property acquired prior to December 31, 1994, special taxation conditions apply. All non-resident sellers, regardless of when they acquired the property, are subject to 3% retention of the sales price, paid to the Tax Office by the purchaser on account of the seller, and applied against the seller’s Capital Gains Tax. PART 4: Miscellaneous Questions & Answers Q: What if I want to buy a plot and build my own home? A: Providing that a building plot is situated within an urbanization, or an area zoned within the Municipal Plan for such use, outline planning permission will already have been granted for the construction of a detached home. However, building regulations, which vary considerably, dictate the permissible size of the villa according to the size of the plot. Care should be taken therefore, before proceeding with the land purchase that one will be allowed to construct one’s chosen home on it. Buy A Home Spain will be pleased to provide a list of bilingual architects and builders and also to arrange viewings of some of their previous work. Q: Are Technical Surveys available? A: A building survey, as it is understood in the U.K., is not necessary in Spain for mortgage purposes. It is nonetheless advisable when purchasing an older property. Common things to check for are the condition of the plumbing and electrical installations, waterproofing, roofing, and so on. These checks, as well as a full structural survey, can be carried out by a Spanish technical architect (aparejador) or indeed by a qualified British Chartered Surveyor. Any fees involved would be to the account of the prospective purchaser. Q: Is Financing possible? A: Since the beginning of the banking crisis in 2008, Spanish banks have made mortgages much harder to obtain as their criteria are much more stringent than before, but now in 2012 access to finance is slowly becoming better, but the banks are apparently encouraging low valuations. However, the banks are equally concerned about the ability of the applicant to service the mortgage loan, and still require a lot of documentation. It is useful to note that when a mortgage is agreed it is on the property, so one of the easiest ways to obtain a mortgage is to ‘take over’ the existing mortgage from the vendor. Of course, the purchaser’s credit would need to be appropriate. A sample documentation required by the Spanish banks does not vary substantially from that required by banks in other countries, and includes: · Two years’ tax returns. · If you are receiving a salary, the last 6 months’ pay slips, as well as proof of any other regular income. If you are a company owner, the proof of your various means of income. · A list of your current monthly mortgage payments (if you have any). · A statement of ones total assets and liabilities, confirmed by a professional accountant. · Copies of one years bank account statements. · Copies of your passports. · In all cases, there will be a mortgage application form to fill in, and sometimes additional documentation is required, depending on the case. The above can be supplied in English, for most applications, but if these documents are in another language, they must be translated officially into Spanish. Obtaining a mortgage for Eastern European country nationals can be more elaborate, since the banking system there is not as transparent as in Western Europe. Q: Who pays Estate Agency Fees in the Sale of a Property? A: The seller always pays agency fees, unless you come up with a different agreement with your agency. Although the seller remunerates his agency, the agent has an ethical obligation to see that the purchaser gets fair value for money, and at the end of the day, a good agent’s job is to bring the buyer and seller together with satisfaction for both parties. This highlights the importance of working with an established estate agency with a strong reputation. Buy A Home Spain provides an exceptional after-sales “settling-in” service for its clients, totally free of charge. Q: How will I deal with Standard Bills? Eg: electricity, water, telephone & rates? A: If the property is within an urbanization or community the administrator for the Community of Homeowners may settle these bills, but usually you will pay direct. With independent properties, payment will be direct. It is normal in Spain to issue standing instructions to your bank to pay them on your behalf. Q: What is an Urbanization? A: An urbanization is a planned community which has complied with the standards of the various governmental agencies with respect of the use of the land (residential, commercial, sports area, green zones), and to providing a specific set of services and a minimum level of quality in the construction of roads, pavements, drainage, sewage systems, electricity and water installations, and so on. Obtaining permission to develop land into an urbanization can take a developer several years and several million Euros of expense. The most obvious advantage to the owner of a property within an urbanization is the fact that the land usage is strictly controlled. If one decides to build a house on a plot in a section of an urbanization zoned exclusively for single-family dwellings, you are assured by law that only the same type of dwelling can be built on the adjacent single-family plot. Q: How long can I stay in Spain as a Tourist? A: Europeans from the E.U. can stay in Spain indefinitely. Visas are not required for some other countries such as the United States, but are still required in other cases, depending on one’s country of origin and with varying lengths of stay permitted. Any non-resident residing in Spain 183 days or more per calendar year is considered by the Tax Office, for tax purposes. Q: Where can I send my Children to School? A. There are several international schools in the area where pupils are taught in English, and a choice of curriculum is offered between G.C.S.E.s and A-Levels, and the International Baccalaureate. There are, of course, local Spanish schools where younger children in particular will learn Spanish very quickly. For an in-depth guide to schools in the Costa del Sol area, please consult the website: andalucia/education/schools/home.htm
Posted on: Sun, 10 Nov 2013 10:27:51 +0000
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