Real Estate Costs and Taxes in Spain

Unpacking Spanish Real Estate Expenses

• Costs of selling property in Spain

  When selling your apartment, first it's important to secure an Energy Efficiency Certificate and a Cédula.

  Energy Efficiency Certificate

  All property owners must possess this certificate, confirming the property's energy performance. Costing around €200, it's valid for 10 years. Non-compliance penalties range from €300 to €6,000.

  
  Properties exempt from the Energy Efficiency Certificate include:
      •    Temporary structures with a planned use of 2 years or less.
      •    Non-residential buildings or parts (e.g., warehouses) not requiring temperature control.
      •    Isolated buildings or parts under 50 m2.
      •    Properties undergoing extensive refurbishment.
      •    Residences used less than 4 months annually, with energy expenditure below 25% of year-round usage, as declared by the owner.

   

  Cédula - Certificate of Habitation

  The "cédula de habitabilidad" is an official document certifying that a residential property complies with the essential standards for habitation, including size, sanitary provisions, and technical connections. It's essential in order to live an and rent your property, register utilities, and pay bills. This certificate can be obtained from Town Hall. The fee varies based on employment status. Valid for one year.

   

  Selling as an individual

  You are required to pay capital gains tax if there is a profit on the sale of the property:

  The primary expense when selling property in Barcelona is the capital gains tax. It is calculated based on the difference between what the buyer pays and what the seller initially paid for the property.

  If you are a EU resident selling your primary home in Spain, you are exempt from capital gains tax on the portion used to buy another residence within 2 years. For instance, if you sell and, within 2 years, purchase a property of equal or higher value for your primary residence, you are fully exempt from this tax.

  Spanish residents aged 65 or older are always exempt from this tax when selling their primary residence, regardless of whether they reinvest their gains in another property.

  If the seller is not a resident of the EU, the buyer is required to withhold 3% of the purchase price and remit it to the public treasury. The seller can seek a refund if the capital gains tax is less than this 3%. Conversely, the seller must pay the remaining amount if the capital gains tax exceeds 3%.

  The tax rate depends on the amount of profit made from the sale. The rates are described below:

   

  Up to €6,000	19%
  From €6,001 to €50,000	21%
  Over €50,000	23%

   

  
  Municipal capital gains

  You are also required to settle the municipal capital gains upon selling your property. This tax is imposed on the increment in the land value during your ownership. The tax rate is determined by the land value at the sale and the ownership duration. If there was no appreciation in land value, no payment is necessary, provided you submit ample evidence for city hall approval. The seller is typically responsible for this tax, unless the seller is a non-resident of Spain, in which case the buyer is obliged to pay. Payment should be made to the Barcelona city hall within 30 business days from the sale date.

   

  Selling as a company

  If the property seller operates as a company or a legally registered business entity, the company must pay taxes on the capital gains from the sale. This profit is determined by the variance in the transfer value (buyer's payment minus seller's initial cost).

  Companies, subject to a 25% tax rate, must also settle municipal capital gains, calculated on the land's increased value.

  For comprehensive tax insights, Casamona advises consulting a lawyer specialized in taxation in Spain.

• Costs of buying property in Spain
  

  If you're considering a property purchase in Spain, understanding the associated costs is crucial. This section provides a concise overview of the Spanish fiscal system, covering both taxes and registration expenses applicable to individuals or companies engaging in property transactions.

  Buying as an Individual

  • The purchase price
  • Notary fees, typically ranging from €500 to €1000 – the responsibility of the owner
  • Registration costs: €1000 to €2000 – these payments go to various authorities. To simplify the process, you may opt to pay a notary to distribute funds to the relevant entities.
  • Taxes: Transfer tax at 10% of the purchase amount, plus a smaller fee for registration (€100 - €400).

  If you're under 32 years old, you qualify for a 50% reduction in transfer tax. To be eligible, you must use the property as your habitual residence, and your annual income should not exceed legal limits (approximately €35,000).
  

  If you're buying a new build development, the registration taxes are 1.5% of the value of the property. If you pay with a mortgage, then it is 1.5% of the mortgage.

  It is advisable to seek guidance from a specialized tax lawyer to understand the specific taxes applicable to your situation.

   

  Purchasing as a Company

  If you buy property as a company, a 10% VAT tax applies instead of the transfer tax. However, if you intend to resell within 3 years (5 years for properties bought before May 1st, 2020), only a 3% tax is due. If the property isn't sold after 3 years, the remaining 7% must be paid.

  For detailed tax information, consulting with a specialized tax lawyer is advised.

  
  

   

  Description of Taxes

  Three taxes to consider when purchasing a property are: ITP, VAT, and AJD. Fortunately, not all three must be paid.

  • Transfer tax - ITP (Impuesto Sobre las Transmisiones Patrimoniales) is a wealth transfer tax applicable to property ownership transfer. The rate varies by region; in Catalonia, it's 10% for properties up to €1,000,000 and 11% above.

  • Value Added Tax - VAT (or IVA in Spanish) is a consumption tax (10%) applying to all products and services in Spain. If buying as a company or a new build, VAT is paid instead of the transfer tax.

  • Registration taxes - AJD (Actos Jurídicos Documentados) is a tax on various administrative documents, paid at the Notary. In Catalonia, it's 1.5% of the declared property value (1.5% of the mortgage value if buying with a mortgage).

   

• The Cost of Owning

   

  The IBI

  • Paid to the local town hall for community improvements.
  • Issued annually, with rates between 1% and 2% of the property's cadastral value.
  • Applicable to both residents and non-residents, typically ranging from €200 to €1000 per year.

   

  Utility costs

  
  

  • Electricity is reasonably priced, with various providers to choose from.
    
  • Other costs may include gas, water, phone, and internet services.

    

   

  Community Fees

  • Payments for building maintenance, varying based on requirements. Both residents and non-residents contribute.

   

  Insurance

  Recommended for property protection.

   

  Residents' Personal Income Tax (IRPF)

  Spanish income tax applicable to all income sources, including property ownership. Exemptions apply for habitual residences under €300,000. If you pay this tax in Spain, remember to file the relevant forms exempting you from income tax in your home country.

  Non-resident Personal Income Tax (IRNR)

  Non-residents pay tax on Spanish-sourced income, including property ownership. Calculated based on cadastral property value.

Important note!

To avoid complications and to ensure that all the taxes and costs will be paid to the appropriate authorities, you can set up an account with a Spanish bank. This way you will not miss any dates or transfers and avoid fines and tax penalties. Casamona offers a service that will provide you a bank account and a NIE.

Disclaimer: Casamona is not liable for errors or omissions. For uncertainties, please consult a lawyer.