PURCHASE TAXES AND FEES ON COSTA
BLANCA PROPERTY
Total Cost of Purchase
When you have found the Costa Blanca property that you like, it is useful to know the total cost of purchase including taxes and fees.
Starting from your agreed purchase price you need to add on;
Transfer Tax (I.T.P. Impuesto de Transmisiones Patrimoniales) of 7% of the declared selling price in the deeds.
Notary Fee. About € 700
Registry Fee. About € 600
Lawyers Fee if you employ one. About € 1.000
The easiest and most convenient way to settles these charges is in the notary's office directly after signing the deed. You will receive a receipt and copy of the deed (Copia Simple) with the peace of mind that your original deed goes straight to the property registry to have your title inscribed.
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Inscription is a rather lengthy procedure, but it's the presentation that matters, and 4-5 months later you can collect your original title deed when it is returned to the notary's office.
Resale vs New Build - Taxes and Fees
Taxes and fees on a new construction are the same as above with an extra 1/2% document tax payable on the declared selling price. Instead of paying I.T.P. Transfer Tax of 7% you pay Value Added Tax (I.V.A. Impuesto Sobre Valor Aņadido) of 7% as something is being purchased new rather than being resold.
Buying a Building Plot - Taxes and Fees
If you buy a Costa Blanca building plot (parcela) the tax alternatives are the following;
From a private person - 7% Transfer Tax (I.T.P) on the declared value in the deed.
From a Spanish company - 16% V.A.T. (I.V.A.) on the declared value in the deed.
From a Spanish company or private builder with the intention to build on it directly - 7% V.A.T. (I.V.A.). This is called purchasing with a Project (Proyecto) and is taxed at the lower rate. In practice you would sign a building contract for the construction at the same time that you sign the deed for the plot.
The notary and registry fees will be less here as the declared value for a plot will usually be lower than for a resale or new build. The notary and registry in fixing their fees take account of the value of the transaction among other things.
Taxes and Fees Payable by the Seller
Plus Valia
The seller pays the Plus Valia, which is usually a relatively small amount, and is a local town hall tax on sale. Each municipality uses the same formula based on the Catastral Value (Valor Catastral) but applies a different percentage. If the property is resold within a year there is nothing to pay, and the amount due gradually increases after this, the longer you have been an owner to a maximum of 20 years. As a rough guide a seller might expect to pay in the region of € 300 - €1.500 but in any event the agent would be expected to provide a town hall certificate prior to the sale, giving the exact amount to be charged.
Capital Gains Tax (I.R.P.F.)
This is a tax return that covers income from every source, and which, of course, could include a capital gain from the sale of a property. There are two cases to keep in mind here:
Non-Residents - (Someone who doesn't have a Residence Card (Residencia) and pays income tax in their home country). Most foreign Costa Blanca property owners are in this category and by law when they sell, 5% of the selling price declared in the deed is held back by the buyer and deposited with the Spanish Tax Office (Hacienda) against the payment of Capital Gains Taxes. If the buyer does not make this deposit it will appear in the registry as a debt against his new property so it is in his interest to check that his representative has deposited it and ask for a copy of the paying in form (form 211). Despite many rumours to the contrary, the only case when the 5% retention for non-residents is not required is when an owner purchased their property prior to 31-12- 1986.
Residents - (Someone who has a Residence Card (Residencia) and pays income tax in Spain). No 5% retention is made here, but when the resident completes his tax return, the sale will be declared, and the the capital gain calculated based on the difference between his title deed declared purchase price and his title deed declared selling price.
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