Information on Spanish real estate law
When purchasing or selling a property in Spain it is necessary to observe the country-specific regulations in order to satisfy the legal requirements in full and, on the other hand, to make full use of the tax advantages available.
This article is for information (current as of January 2019) purposes only and does not constitute legal or tax advice. Porta Mallorquina Real Estate has worked with many reputable law firms for throughout the years, and would be happy to recommend a specialist to help answer any of your questions.
One-time taxes (for buyers):
- Land transfer tax (ITP):
Area of application? Purchase of existing properties (not first-occupation or second and subsequent transfer, unless there’s a full reformation).
Who is paying? Buyer
How much? 8% – 11% graduated depending on purchase price.
- Value addes tax (IVA):
Area of application? Newly-built or extensively renovated residential properties built by the seller for re-sale.
Who is paying? Buyer
How much? 10% of net purchase price.
- Stamp duty (AJD):
Area of application? Only due when IVA is required.
Who is paying? Buyer
How much? 1.2% of net purchase price.
One-time taxes (for sellers):
- Capital gains tax:
Area of application? If the seller is a “non-resident” 3% of the purchase price is retained from the buyer as a payment on account and paid to the Spanish tax authorities. The seller then has 3 months to submit his tax declaration.
Who is paying? Sellers (non-resident)
How much? 19% of the profit from sale (the difference between the purchase price and the selling price).
- Capital gains tax:
Area of application? No on-account payment required.
Who is paying? Sellers (resident)
How much? 19% – 23% of the profit from sale (the differenece between the purchase price and the selling price).
- Capital gains tax:
Area of application? Payable on the difference between the book value and revenue from the sale.
Who is paying? Sellers (legal entities such as an S.L.)
How much? 25% corporate tax
- Increment value tax (plusvalia municipal):
Area of application? Municipal tax on the fictive land value-appreciation based on the cadastral value of the land.
Who is paying? Sellers
How much? The value of the land can be seen in the property tax assessment – ‚valor del suelo‘ The tax is calculated at the time of sale using various assessment rates.
Current taxes (for owners):
- Property tax (IBI):
Area of application? Every type of residential property.
Who is paying? Owners
How much? Varies with municipalities, for urban properties between 0.4% and 1.1%, for rural properties between 0.3% and 0.9% based on the cadastral value.
- Income tax (For foreigners IRPF. For Taxpayers: IRNR):
Area of application? For second residences in Mallorca – the state assumes a ‚fictive-usage‘ of the property and this taxis ed.
Who is paying? Non-resident owners
How much? Fictitious utility between 1.1% and 2% of the cadastral value (depending on the municipality). Then 19% tax (EU / EEA residents).
- Wealth tax:
Area of application? For Spanish residents valid for global assets, for foreigners only for Spanish assets, for German taxpayers only for real estate in Spain.
Who is paying? Owners
How much? Valid on assets worth from 700.000 Euros.
Current taxes (for long-term rentals and holiday lettings):
- Income tax (IRPF):
Area of application? Valid for non-resident owners who are in Spain for less than 183 calender days.
Who is paying? Owners (long-term rentals)
How much? 19% of the net rental income for EU citizens.
- Income tax (IRPF):
Area of application? Valid for owners who have their main place of residence in Spain.
Who is paying? Owners (long-term rentals)
How much? Only 40% of the net rental income must be taxed in the case of long-term rentals.
- Corporate tax and turnover tax:
Area of application? Before starting with holiday renting you should always consult a tax advisor who specialises in in this area of tax.
Who is paying? Owner (touristic holiday rentals)
How much? 25% on the profit
In addition, we regularly inform about new developments in Spanish real estate and tax law in our blog and our monthly newsletter.
