Real Estate - Spain

Spanish Taxation

The IVIE tax on real estate in the EU: the case of Spain

The case of the properties held by Italian residents in Spain is particularly interesting to illustrate the application of this provision and the tax credit in particular.
Spain in fact has a cadastral system very similar to the Italian and taxes its own properties based on the higher of the land register; It provides for a tax on real estate equity nature (IBI) and, in addition, also provides for an income tax on land income from immovable property.

Applying the rules above views, therefore, the taxable amount will be calculated not on the value indicated in the purchase, but only on the basis of the cadastral value (which, for the taxpayer, is a significant advantage, since even Spain, the land value is usually lower than the market value).
That value will be applied, therefore the rate of 0.76% (or by 0.4%, the conditions are fulfilled) and, at that point, it will decide whether the calculation result of the operation will be higher or lower than the cd. "Allowance" of € 200.00 if it is lower, nothing will be given to IVIE purposes, regardless of the fact that, abroad, has paid the IBI and renta.
Where on the contrary the result ports to overcome the threshold of 200 €, the total will be deducted from tax in the first instance competition the tax credit equal to the entire IBI paid to the Ayuntamiento of property belonging.

If by that be left when operation a share of IVIE payable, the taxpayer could benefit even a "credit" equal to the income tax paid in Spain and related to the property, provided they have not used, in accordance with art. 165 Income Tax Code as a credit for income taxes payable in Italy (for of course income generated in Spain).

Taxation
If the house is newly built (so has never been previously inhabited) you must pay the 10% VAT.
If you buy from a private not VAT but the ITP (Impuesto sobre Transmisiones Patrimoniales) applies that goes in stages. Up to 400,000 € is applied ITP of 8%, up to € 700,000 a ITP 9%, more than € 700,000 a ITP 10%.

The new properties under construction are obviously paid during the work. All payments made before delivery must be ensured in accordance with the Law of the Construction Regulation (L.O.E.) 38/1999, by a bank or insurance guarantee.
If the property is not completed by a certain date, the buyer has the right to seek recovery of the funds paid plus interest legally due. In addition, this law requires property developers to sign an insurance policy for a period of ten years against s defects of the basic building, where the beneficiaries are the buyers.
Once the purchase price of the property has been paid in its entirety, it will proceed with the notary "Escritura" between the seller and the buyer. This act is signed in front of a Spanish Notary, is then sent to the agency tax for the payment of transmission tax if it is a property in the resale or second hand, or to the tax on legal transactions if it is a 'direct purchase by a promoter. It is then forwarded to the Land Registry for registration.

 

All information is purely informative and does not determine the contractual agreement.

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