Alicanteos

During a sale of new property neither the seller nor the buyer have to pay the property transfer tax (ITP 6% - 7%) , but there are 2 other taxes to pay:

1 – VAT , the tax is applied on the price depend on the type of the property sold.

7% on houses, flats
16% on garages, locales
4% on house that are legally protected

2- The second tax is the stamp duty AJD (Impuesto de Actos Jurídicos Documentados) of 0,5¨%

Example :

If you buy a new property to a developer for 60 000 euros , you will a VAT on that property of 4200 euros, in addition there is the stamp duty of 0,5 % - 300 euros

The VAT is applied directly on the sale price, the stamps duty have to be paid by the buyer within 30 days after the contract (escritura) has been signed.

Recap:

New property - taxes

VAT
Capital Gains Tax
Stamp duty

Resale property – taxes

Capital Gains Tax
Property Transfer Tax
(there is no VAT and stamp duty on resale property)

Technorati Tags: VAT, ajd, stamp, duty, new, property

Newspaper Elpais gives a few tips to reduces your 2006 tax bill.

Property to let/rent

• If the property is rent as a home to live (as opposed to an office) there is only 50 % to pay.
• If the property is let to young people between 18 and 35 years old, there is nothing to pay.
• If you want to make improvement into your property for the purpose of renting do it or end it before the end of this year so you will be able to deduce the expense of your work. If the cost of your improvement is higher than your gain from the rent, it will be possible to differ part of the revenue on the coming year thus reduce the next year tax bill.

(more…)

Residents in Spain are liable for Spanish Inheritance Tax (IHT - El impuesto sobre sucesiones y donaciones) regardeless in which the inheritance is located, you are considered a resident if you spend more than 183 days on Spanish territory during the calendar year; the main centre or base of your activities or economic interests is in Spain, directly or indirectly. (more…)

According to Spanish Property Insight, the capital gains tax for non-residents was reduced from 35 % to 18 % (and increased for residents from 15% to 18%), the legislation was approved in October by the Spanish senate. The new regulation will start in January 2007.

Withholding provision for non-resident was also reduced from 5% to 3%.

Residents and non-residents have to pay a capital gains tax when they sell their properties. According to Marbella Lawyers : A non resident will pay 35% on the net gain after selling, as opposed to a resident, which will pay 20% on the net gain. Also, a non resident will have a 5% of the sale price withheld by the buyer on account of the capital gains tax. This obligation on the buyer was implemented to avoid tax loss from non residents which would sell and not pay tax. After the tax liability is assessed, a refund may be available, as the case may be. (more…)

Technorati Tags: capital gains tax