A Guide to Purchasing Property in Spain
The south of Spain, especially the gorgeous Costa del Sol is a firm favourite for people from all over the world who come to enjoy their vacations. Invariably, they fall in love with the unbeatable lifestyle on offer and the sought-after Mediterranean climate. With all this in mind, they then tend to consider purchasing a second property here, which they can enjoy for themselves and for their friends and families. Additionally, the property may also be purchased as an investment that can be rented out short-term to generate a sizeable income.
Below, we address some commonly asked questions from our clients who wish to purchase a property on the Costa Del Sol.
What is the first step I should take when purchasing a property in Spain?
As a non-resident of Spain, you will need a NIE number which is a unique identification number assigned to foreigners, it is tied to everything you do economically, professionally, and socially in Spain. In Spanish, the NIE is known as a “número de extranjeros”, and is used in the purchase of your property and the registration of it into your name, it will also accompany all tax returns that you do. Your property lawyer can apply for your NIE number on your behalf. If you do not have a lawyer to represent you, please ask us and we will gladly introduce you to our trusted legal partner.
What time period can I spend in Spain as a non-resident and what taxes will I pay on my property?
Any person who lives less than 183 days per calendar year in Spain is classified as a non-resident. As a non-resident you are obliged to pay tax on any income source that is generated in Spain, regardless of whether you rent the property out as your second home or not, you are still legally required to complete an annual tax return. As non-residents you will be obliged to pay Spanish non-resident tax and local taxes on your property here in Spain.
What does my tax percentage look like as an EU or as a non-EU resident?
As an EU citizen, you will pay 19% taxation on the profit from the rental revenue, and you are allowed deductions such as interest on your mortgage and rental fees. However, if you are a non-EU citizen your tax is 24% of the full income on the gross rental revenue, and the amount generated is fully taxable without any deductions. Whether you rent the property out or not, you are required to complete a tax return in Spain. If the property is rented for additional income, you are also required to submit your taxes every quarter. If you are married, then both spouses are required to submit a tax return. If the property is not rented out and is simply intended to be enjoyed by you, and your friends and family, you will still be required to submit a tax return, which is called a “deemed tax return”.
Our Tax Consultant Partner can help you with all of your returns offering you peace of mind that all of your tax affairs are in order.
What taxes will I be liable for when I purchase a property in Spain?
Firstly, Value Added Tax (VAT) is required to be paid, and this varies depending on whether you purchase a new build or a resale property. Each autonomous community differs in the amount of VAT that they charge on properties, for example, in Andalusia which encompasses the Costa Del Sol a current VAT charge of 7% on resale properties, and 10% on new build properties is liable.
What do my annual taxes look like on a property in Spain?
A property tax levied by the Town hall referred to as IBI (Impuetos sobre Bienes Inmuebles) is charged annually and the amount is calculated based on the cadastral value for your property. IBI is a municipally levied tax and is equivalent to the council tax paid in the UK, and the cadastral value is the monetary value given to the property by the authorities.
I’ve sold my property in Spain, what taxes will I need to pay?
The Town hall will request that you pay Capital Gains Tax known as “Plusvalia” this tax is set by each autonomous region, for example, in Andalusia, it detailed as follows:
19% for non-residents from the EU and EEA
24 % for non-residents from other countries
At AN Properties, we have spent a long time ensuring that the professional partnerships we have created are solid and reliable. We are proud to be able to offer a 360° turn-key solution to our valued clients when they purchase a property here on the Costa del Sol. All Professional Support Services required when making a property purchase, such as tax advisors, mortgage brokers, lawyers, and currency services are available to our clients from our trusted business partners who have the experience and local know-how to guide them seamlessly in securing their very own home in the sun. If you have any questions at all contact us today at 654 713 971.
*The information detailed in this article is intended as a guide only and is correct as of publishing December 2022. Alison Norton Properties is not liable for any losses that occur as a result of action taken from following the advice in this article. Always consult with a qualified lawyer prior to purchasing a property in Spain.
