This information was prepared by our team to the best of our knowledge and with the information available at that moment. The content of the guides is for information only and may be subject to errors, omissions or changes. It is highly recommended to check the information details with your lawyer or tax advisor.
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1. BUYER’S GUIDE
A complete guide on all what is needed to buy a property in Marbella & Benahavis
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2. EXPENSES WHEN BUYING A PROPERTY IN MARBELLA & BENAHAVIS
TAXES WHEN BUYING BRAND NEW PROPERTIES
For new properties acquired directly from developers or builders, a 10% VAT of the sales price and a 1.2% stamp duty apply. Commercial premises, detached garages, and land purchases from developers incur a higher VAT of 21%, plus the 1.2% stamp duty. These taxes are directly paid with the price of the purchase when closing at Notary.
TAXES WHEN BUYING SECOND HAND PROPERTIES
Secondhand homes, on the other hand, are subject to a 7% transfer tax based on the reference value of the property. This transfer tax, contrary to the VAT tax, has to be paid directly to the Tax Office within 30 days of closing date.
EXCEPTIONS AND REDUCTIONS ON THE PAYMENT OF TAXES
The tax when buying a property for its use as main residence when the price is less than 150,000 € is reduced to 6%.
The tax when buying a property for its use as main residence when the price is less than 150,000 € when the buyer is under 35 years of age, has suffered domestic violence, is a terrorism victim, or in a depopulated municipality is reduced to 3.5%.
The tax when buying a property when the price is less than 250,000 € for a buyer legally considered a person with a disability of 33% or more or a member of a large family is reduced to 3.5%.
Real estate companies or professionals purchasing and selling within 5 years benefit from a reduced 2% transfer tax.
For transactions between legal entities with waived VAT exemption, a "VAT reverse charge" applies, resulting in 0% VAT and 1.2% stamp duty.
OTHER EXPENSES WHEN BUYING
Lawyer’s fees. Legal fees, approximately 1% of the purchase price, are advisable for comprehensive advice.
Notary and Land Registry fees. The fees depend on the complexity of the title deed and may be estimated as 0,25% of the purchase price.
Technical Inspection fees. Technical inspections are not compulsory when buying a property in Spain are in general not very common, although advisable depending on the property and the price of the property to be adquired. The price of those surveys varies also depending on the same factors and can go from a few hundreds to even 3.000 €.
Mortgage Fees. That includes the analysis fees from the bank and the cost of a valuation which is required by the banks. The analysis and opening fees are in general assumed by the banks and the valuation fees may vary between 300 € to 2.000 € depending on the property to be valued.
* As each case is different, it is highly recommended that you check your own details with your lawyer or tax advisor.
3. SELLER’S GUIDE
A complete guide on all what is needed to sell a property in Marbella & Benahavis
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4. EXPENSES WHEN SELLING A PROPERTY IN MARBELLA & BENAHAVIS
There are two main taxes when selling a property in Spain: the Capital Gain Tax and the Municipal Plusvalia Tax.
CAPITAL GAIN TAX
This is a general rule for individuals, since there are many particular cases that we cannot deal with due.
1. How is the Capital Gain which is going to be subject to the Tax calculated?
Patrimonial Gain = Value Transferred - Acquisition Value
The details on how to calculate these two values are as follows:
Value Transferred is the value for which the property is sold minus the expenses and taxes associated to the sale operation that are detailed below:
The real estate agency fees, if the operation is carried out through one, with its corresponding VAT (at this point it is important to know that to deduct an expense you must have a supporting document - receipt of payment of a tribute or invoice - so it is key to keep them when a transaction is carried out).
The Tax on the Increase in Value of Urban Land, known as Plusvalía Municipal Tax.
The expenses of cancellation of the mortgage in case there was one on the property.
Acquisition Value is the value that was paid for the property plus possible investments made on it, reforms (you must have invoices to be able to add them), plus the expenses and taxes associated with the purchase operation that are detailed below:
Notary and Land Registry expenses.
The Transfer Tax or VAT, as applicable, depending if it was a second hand property or a new unit.
The Stamp Duty (Impuesto de Actos Jurídicos Documentados).
The refurbishing costs of the house destined to the extension or to a substantial improvement of it. To add these costs to the acquisition value it is necessary to have the invoices that accredit these expenses.
2. When is the Capital Gain Tax paid?
In June of the year following the year in which the transaction takes place and within the Income Tax (IRPF).
3. What is the rate of the Capital Gains Tax?
The tax rate is divided in brackets and depends on the capital gain you have had:
Up to 6.000 €, the tax applied is 19%
From 6.000 € to 50.000 €, , the tax applied is 21%.
From 50.000 € to 200.000 €, the tax applied is 23%.
On top of 200.000 €, the tax applied is 28%.
In the case of sellers non residents in Spain, the tax applied is a flat rate of 19% if the seller is a European resident and 24% for other nationalities.
In any case, for sellers who are non-residents in Spain, the buyer is legally obligated to withhold 3% of the purchase price at the Notary. This amount must be deposited at the Tax Office within 30 days from the closing date, serving as a provision for the taxes the seller is required to pay. If the Capital Gain tax is less than the withheld 3%, the seller is eligible for a refund of the excess amount, typically taking between six months and one year to be reimbursed. Conversely, if the tax owed exceeds the 3% withholding, the seller has a four-month period to make the additional payment to cover the total tax liability.
PLUSVALIA TAX
The Plusvalia (Council) Tax is a local tax in urban areas levied by Spanish Town Halls on property transactions (houses, commercials, plots, etc.) of whatever type (sale, inheritance, donation, etc.) based on the growth in the value of urban land. By law, the tax is payable by the vendor although in some cases, and by mutual agreement, the buyer may pay it.
The Plusvalia is a tax that requires an agreement of the Plenary Session of the Town Hall where applicable coefficients, tax rates, reductions, exceptions will be fixed inside certain margins established by law (Ley Reguladora de Haciendas Locales). On Inheritances and donations, it is the beneficiary the one obliged to pay while, in sale transactions, it is the seller (if the seller is non-resident in Spain, it is recommended that the buyer retains the Plusvalia tax amount that will be required to him if the seller does not pay) the liable party.
In November 2021, a recent legislation was enacted to exempt Plusvalia Tax payments in the event of a financial loss. Although the obligation to present the tax declaration still persists, even when properties experience a decrease in value, the new Law established two different ways to calculate the tax: a direct estimation or the original, similar to, objetive system.
Direct Estimation
In this case, the base for the tax is calculated by considering the purchase and sale prices, the duration of ownership, and a reduction coefficient. Each Town Hall has the authority to apply a reduction coefficient, with a maximum limit of 15%. Using this method, in case of a loss and being the sales price lower than the purchase price, the calculation is going to result negative and the tax zero.
Objective System
The Plusvalia is calculated as a function of the catastral value of the land and the number of years of ownership (up to a maximum of 20 years). The higher the catastral value and the number of years of ownership, the higher the tax.
Plusvalia tax = Catastral value of the land x Yearly percentage of value’s increase x Number of years of ownership x Tax rate
The yearly percentage of value’s increase and the tax rate are fixed by the Town Halls. They are established locally as:
Marbella: Yearly percentage of value’s increase: 2,4% Tax rate: 30%
Benahavís: Yearly percentage of value’s increase: 2,3% Tax rate: 20%
* As each case is different, it is highly recommended that you check your own details with your lawyer or tax advisor.
5. EXPENSES WHEN OWNING A PROPERTY IN SPAIN
When delving into the financial considerations tied to property ownership in Spain, it becomes imperative to distinguish between maintenance costs and expenses not directly related to property upkeep. In this article, we will specifically focus on the latter.
1. Council Ownership Tax (Impuesto sobre Bienes Inmuebles I.B.I.)
The I.B.I., an abbreviation for Impuesto de Bienes Inmuebles, stands as an annual tax applicable to all Spanish properties. This local tax, irrespective of residential status, is paid to the Council and contributes to maintaining the infrastructures and services provided by the Town Hall. Calculated as a percentage (Benahavis, for instance, applies a 0.4%) of the catastral value or tax value, the I.B.I. is a crucial aspect of property ownership.
2. Rubbish Collection Tax (Basura)
The Rubbish Collection Tax, another local tax, is paid to the Council by property owners, regardless of residential status. This tax funds the rubbish collection services provided by the Town Hall. Each Council sets its own tax rates, ranging from a fixed lump sum per year to a percentage of the catastral value.
3. Annual Wealth Tax (Impuesto de Patrimonio)
Applicable to both residents and non-residents owning property in Spain, the Annual Wealth Tax is a nuanced aspect that requires expert advice for clarity.
4. Personal Income Tax
Exclusive to non-residents in Spain, this yearly tax has distinct modalities based on whether the property is rented out or not. For rented properties, the tax is 25% of the declared income, while for non-rented properties, it is 25% of 2% of the catastral value.
5. Community Fees
In condominiums, whether comprising buildings, townhouse complexes, or communities of independent villas, shared maintenance costs for common elements (pool, garden, roads, lights, security, etc.) are distributed among property owners. A yearly budget is prepared, and fees are calculated as a percentage associated with the property.
6. Insurance
Though not compulsory in Spain, having household insurance is strongly recommended. The potential risks far outweigh the cost of ensuring your property's protection.