The cost of selling property in Barcelona - as an individual
You are required to pay capital gains tax if there is a profit on the sale of the property:
- Capital gains tax is the main cost of selling property in Barcelona. This amount is based on the difference in the transfer value (what the buyer pays for the apartment and what the seller previously paid for the same property).
- If you are a resident in the European Union and sell your habitual residence in Spain, you are exempt from this tax for the fraction of the capital gains that goes into the purchase of another residence within a maximum of 2 years. If, for example, you sell your residence and, in less than 2 years, buy another property where you intend to live, which is of the same or higher value than the one you sold, you are completely exempt from this tax.
- Spanish residents over 65 years of age who sell their habitual residence are always exempt from this tax, whether they use their gains to buy another property or not.
- In the case that the seller is not a EU resident, the buyer is obliged to retain 3% of the purchase price from the seller and give this amount to the public treasury. The seller will be able to request a refund of the excess in the case that the capital gains tax is inferior to this 3%. On the other hand, the seller must pay the remaining if the capital gains tax is higher.
- 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%|
You are also required to pay the municipal capital gains when you sell your property:
- Municipal capital gains is a tax on the increase in the value of the land on which the property is built, during the time that you were the owner.
- The tax rate is calculated according to the value of the land at the time of the sale, and the number of years that you owned the property. However, if there was no increase in the value of the land while you were the owner, you don't need to pay this tax as long as you can present sufficient proof to the city hall and they approve your application.
- The seller is the one who pays this tax. However, if the seller is not a resident of Spain, the buyer who will be obliged to pay it.
- The tax must be paid to the Barcelona city hall within a maximum of 30 business days since the date of the sale.
The cost of selling property in Barcelona - as a company
If the seller of a property acts as a company or as a legally registered business person, the company is required to pay capital gains taxes on the profit.
- The profit is the difference in the transfer value (between what the buyer pays for the apartment and what the seller originally paid for the same property).
- Companies and legally registered business people are taxed at a company’s tax rate of 25%.
Companies are also required to pay municipal capital gains, based on the gain in value of the land where the property is built, the same as the individuals above.
For more detailed information about taxes, Casamona recommends speaking to a lawyer specialized in taxation in Spain.
If you are interested in buying a property in Spain, there are various costs you need to know about. This section will give you a clear overview of what you need to know about the Spanish fiscal system.
Any person who has the intention of purchasing property in Spain is subject to two main types of expenses, the first being taxes and the second being registration costs. Typically, it is recommended that anyone who wants to buy a property in Barcelona has at least 12% on top of the property value in order to cover all of these costs and taxes:
a) ITP, VAT and AJD taxes - The three taxes from buying a property
Luckily, not all three taxes must be paid. What taxes must be paid in what circumstances is explained later in this section.
- ITP - Spanish for Impuesto Sobre las Transmisiones Patrimoniales, is a wealth transfer tax that applies to the transfer in ownership of a property. The rate varies depending on what region of Spain you are in, however in all of Catalonia (Barcelona included) it's fixed at 10% for properties up to €1.000.000 in value. Above €1.000.000 a tax rate of 11% is applied.
- VAT - The Value Added Tax (in Spanish IVA) is a consumption tax that applies to all products and services. It is the same for all of Spain. In the case of purchasing a property, the rate is also 10%.
- AJD - Spanish for Actos Jurídicos Documentados, is a tax that applies to several types of administrative documents. In the case of purchasing a property, this tax is applied to the Notary Documents. There are two types of AJD tax - fixed and variable rate. The fixed rate depends on the number of sheets of paper that make up the notary documents. The variable rate is different in each region of Spain, but in Catalonia (and Barcelona) it's 1,5% of the declared value of the property (except in the case of buying with a mortgage, in which case the variable AJD tax will be 1,5% of the mortage value).
In the case of a previously owned property, the ITP of 10% and the fixed rate of AJD must be paid. The latter tends to be a small amount at €0,15-€0,30 per page in the notary documents. However, if you are buying a new property, then you must pay IVA of 10% and both the fixed and the variable rates of AJD.
In a few cases, a reduced ITP tax of 5% is applied instead of the usual 10%. Two of the most common cases are:
- Home purchases for young people, who are below the the age of 32, and who will be using the property as their habitual residence, if their annual income does not exceed the legal limits (approximately €35.000).
- Home purchases for families with 3 or more children. The house must become their habitual residence and the total income obtained by the family cannot exceed the legal limits (€35.000 approximately).
Example of buying a property as an individual:
You are purchasing a new apartment of €100.000 without a mortgage, and you are above the age of 32. The apartment itself costs €100.000, however you must add another 10% on top of the value for the ITP tax. You must also pay the variable AJD rate of 1,5% which in this case is €1.500. The final price, excluding other notary and registration costs, will be €111.500 plus the fixed AJD tax which is typically very small when compared to the rest of the taxes.
- Registration costs are a mandatory expense for anyone buying an apartment. These are paid to various authorities within the Spanish system. At times, this process can seem difficult to manage. Therefore you can get a full package with a notary, who will then distribute your money to the appropriate authorities.
- Typically, the registration costs amount to about €1000 – €2000.
When buying property as a company, we must distinguish between real estate companies and all other types. All other types of companies have to pay a VAT tax of 21% when purchasing a property (such as an office to work from), but they can then make deductions for business expenses. We would recommend they consult with a lawyer specializing in the Spanish tax system in order to learn the best way to do this.
Real estate companies that purchase a property only have to pay 10% VAT tax. However, if they are planning to re-sell that property within a period of 3 years (5 years for properties purchased before May 1st, 2020) they only have to pay 3%. If, after said 3 years, they still haven't sold it, they will have to pay the remaining 7%.
Example: A real estate company buys a property for €100.000 and are planning to re-sell it within 3 years, then the final price with VAT will be €103.000. If, after 3 years, they still own this propery, they will need to pay an additional €7.000. This is excluding the notary and registration taxes.
The costs of owning property in Barcelona
Firstly, for all taxation purposes, it is essential to establish whether or not you are classed as a Spanish tax resident.
Tax Residents of Spain are considered to be those:
- Physically present in Spain for more than 183 days of the calendar year – including occasional absences.
- Whose main base of professional or economic activities are in Spain, directly or indirectly.
- Whose spouse and dependent children reside in Spain.
Once you have purchased your apartment as a foreigner and paid the obligatory taxes and costs, there are still several other costs you need to be aware of: IBI (property tax), community fees, wealth tax, and personal income tax (if you rent the apartment).
- The IBI is a mandatory property tax, which is paid to the local town hall. These taxes are aimed at improving the infrastructure and cleanliness of the given community.
- Property tax slips are issued by the municipality, normally between the months of September and November. The tax rate is usually between 1% and 2% of the cadastral value of the property.
- If you fail to transfer the IBI to the local authorities within the indicated time frame, there will be a penalty charge of 10-20% of the IBI. To avoid such a situation, you can arrange for an automatic transfer to be made with a Spanish bank.
- Both residents and non-residents have to pay IBI.
- Community fees are costs paid to the president of the building. This fee is paid towards the maintenance of the building.
- The cost of the community fees depends on the building and the maintenance required.
- Both residents and non-residents have to pay community tax.
Residents' Personal Income Tax (IRPF)
IRPF (Impuesto sobre la Renta de las Personas Físicas) is the Spanish income tax paid on any source of income including the ownership and renting out of property. Even if you are not renting out your property, you must still pay a wealth tax and include it in your IRPF if the property is not your habitual residence. If it is your habitual residence, you are exempt from this tax if the value of the property is €300.000 or less. If you pay this tax in Spain, remember to file the relevant forms exempting you from income tax in your home country.
Non-residents' Personal Income Tax (IRNR)
IRNR (Impuesto sobre la Renta de No Residentes) is the income tax that non-residents must pay on any source of income generated within Spain, including income from owning and renting out property. Just as it is for residents, non-residents must also pay a wealth tax, to be included in their IRNR, simply for owning property even if they do not rent it out. They must pay this tax even if they currently live in said property, unlike residents, because it cannot be considered their habitual residence (which is located in another country). This tax is calculated according to the cadastral value of the property.
Example: Whether you are a resident or a non-resident, if you purchased an apartment for €100.000 where you do not reside, and you want to know how much your annual costs will be, you have to consider the following:
- Let us suppose that your IBI has been set at €800 by the local town hall.
- The community fees for your building are set at €400 per year.
- Your property is valued a €100.000, the wealth tax is around 2% of the net value of your property, or €2.000 in this case.
This means that the total annual costs for owning this property will be €3200, excluding utilities.
How to pay different property purchase costs in Barcelona
Up front with cash or transfer money directly to the Casamona account.
Reservation can be made by transferring money directly to the Casamona account, and we will pay the seller.
Transfer money directly to the Casamona account or lawyer’s account, either of which will pay the seller.
Also, there is a possibility to meet in person and pay in cash or with a bank check.
By bank transfer or by bank check from a Spanish bank account.
Cash to the bank, bank check or pay with credit card directly from a Spanish bank account or your home account.
Gas, electricity, water and community fee
Transfer or pay with credit card directly from a Spanish bank account.
Transfer or pay with credit card directly from a Spanish bank account.
Energy Efficiency Certificate
All property owners must have an energy performance certificate and the results of the energy efficiency should be added to all adverts, to information of the property and to all contracts.
The certificate costs around €200 and is valid for 10 years. A certified technician will inspect the property and take care of the necessary paperwork. The relevant energy department of the Catalan government will then issue the certificate to the owner, called 'Certificado de Eficiencia Energética'.
The energy efficiency test will look at both the energy consumption of the property, as well as the energy emission. This will then be rated on a scale from A to G (A being the most efficient and G being the least efficient).
It is important that owners obtain this certificate, as the penalty fee of breaching this will range from €300 to €6.000. However, there are a few exemptions and the following do not need to get a certificate: historical or otherwise officially protected buildings, buildings or parts of buildings used exclusively for religious activities, provisional properties with a planned use of 2 years or less, non-residential buildings (or parts of buildings) that do not require maintaining a comfortable temperature (like a warehouse or a garage), buildings or parts of buildings that are isolated and have a useful surface less than 50 m2, properties that will undergo extensive refurbishing work, and properties used less than 4 months a year (like a holiday home) as long the energy expenditure is less than 25% of what would result from its use year-round and the owner declares it as such.
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.
Casamona is NOT liable for any errors or omissions within any section of "Costs and Taxes". If you are in any doubt please contact a lawyer.