This is a brief explanation of the most common types of taxation you might come across in Spain.
1. Property tax (Impuesto sobre bienes inmuebles).
Property owners pay between 0.3% and 0.6% of the cadastral value. This varies between authorities.
2. Transfer tax (Impuesto de Transmisiones Patrimoniales).
Transfer tax is 7% over the amount stated in the title deeds. This applies to existing accommodation.
3 VAT (IVA ).
The rate is 7% when:
- purchasing new construction from a developer.
- purchasing a building plot linked to the commission to build accommodation.
The rate is 16% when:
- purchasing commercial property.
- purchasing a building site from a developer.
In addition you may encounter wealth tax, tax on the increased value of site and house, capital gains tax etc. If you have any questions about taxation feel free to contact us. We will be pleased to help you.
Spain is an interesting place for investment, because property prices are still increasing by more than 10% annually. There are several ways to make a good investment.
- Purchase and live in the accommodation. After several years profit can be made on the sale.
- Purchase and rent the accommodation. This will give an annual rental income with a minimum of 6% net profit. Profit will also be made when the property is sold.
- Purchase a property at the drawing stage and then after an average completion time of 2 years, sell it. What is interesting about this type of investment is that you have generally only paid 30% of the price and can get a good return on the investment when selling.
With our extensive knowledge of the market and close contact with developers we can advise you on a good investment.