Tax obligations when buying a property in Spain


Derecho Inmobiliario y cuestiones Fiscales

If you are the owner of a property or you are thinking of buying a property in Spain, it is important to be aware of the taxes and legal obligations that this implies

Concerning tax matters, the implications can vary depending on whether you are resident or not.

The use given to the property also affects the tax implications, this be as investment, rental, sale or as a second home.


Initial expenses

In the purchase of a property there exist various expenses to be kept in mind:

  • Notary expenses.
  • Property Registry office.
  • Tax on increase of land value (plusvalía) and transfer tax or fiscal stamp duty (ITP or VAT).
  • Expenses specialists or lawyers
  • Bank expenses in the case of purchase with mortgage.

 Tax obligations after the purchase  Non resident Tax (IRNR)

  • The Non resident tax should be paid by all non residents owning properties in Spain.
  • This tax is calculated through using the land registry value
  • The income from rental of your property in Spain as a non resident should be declared every quarter.
  • Council Taxes after the purchase
  • Other local taxes are those such as the IBI (Council Rates receipt) and that of the rubbish Collection (Yearly taxes)
  • The amount to be paid is based on the land registry value stated by the Land registry office
  • The receipt is issued by the local Town Hall where the property is located and should be paid in the stipulated period of payment, to the contrary a % surcharge may be applied.

Capital Gains Tax in the case of sale

  • This tax is applied on the sale of a property. In the case when the seller is a non resident.
  • 3% is charged on the declared selling price and will automatically be withheld by the purchaser as a payment to account of the Non Resident Income Tax for the profit obtained.
  • At a later date, the capital gains should be calculated and if the 3% withheld is above the amount owed, the rebate of the difference should be requested from the Spanish Inland Revenue office.
  • On the other hand should the 3% paid be less than the tax owed the difference should be paid to the Inland Revenue office.

Wealth Tax (Yearly)

  • This should also be paid by the non residents in accordance to the progressive scale as from the minimum amount exempt from Tax.

 Inheritance Tax

  • This tax is applicable to residents and non residents.
  • Each Autonomous Region sets its own quota concerning the inheritance tax of non residents.
  • It is highly recommended that a will be drawn up before a Notary. Non residents may make a will only for their assets in Spain and this considerably helps the inheritance proceeding when this moment arrives.
  • If you would like to discuss the impacts of Brexit on your business in more detail, or need help with notarization, legalization or translation work, please contact Bufete Frau team



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