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Main taxes on the sale of real estate

Real Estate
Main taxes on the sale of real estate

The sale of real estate presupposes a transferring act of the property, and aspects related to the formal or tax duties of those involved in the sale of a property must be taken care of. In this article we will know the taxes that must be paid for the sale of a home.

As specified by Forcam Abogados, it is highly necessary and vitally important to pay these taxes in order to obtain home ownership, once the negotiations have come to fruition.

Next, we will show you what are the taxes that you must pay to buy a property:

The first is VAT

The Value Added or Added Tax -VAT-, which constitutes an indirect tax that directly levies consumption. 

Characteristics:

  • The tax rate is 10% of the home purchase price or 21% for commercial properties and parcels of land or 21% if a number of properties is exceeded.
  • VAT is a national tax, so it is the same in all regions, with the exception of the Canary Islands, where it is 6.5%. 

What happens with the amounts that are previously paid as a deposit, are they also taxed with VAT?

If a deposit is paid, as a guarantee reserve for the legal business, before the sale is effectively closed, this must be paid before the sale is closed, said amount is subject to the payment of value added tax VAT.

Tax on Documented Legal Acts

It is a tax that is generated in the event that the property that is the object of the sale is taxed under a mortgage, that is, the signature before a notary public is taxed, as well as the registration of the home in the Property Registry. 

Who cancels this tax on documented legal acts?

The bank that grants the mortgage is the one that must pay this tax for the purchase of the property.

Characteristics

Regarding the tax rate, it varies depending on the autonomous community. Everything will depend on the community and the percentage of the total amount of the house.

Real Estate Tax

The property tax on real estate is a type of local tax on possession of real property. 

Characteristics:

  • It must be canceled once you have ownership of the property
  • Regarding the tax rate, it may vary according to the region where it is applied, and is calculated based on the cadastral value.

What about non-residents?

Non-residents who wish to buy a property in Spain must pay the Non-Resident Income Tax or also known as Model 210.

Characteristics:

  • This tax is levied on the legal business of home purchase for non-residents
  • This tax, model 210, varies depending on whether the house is rented or not: If the house is rented and, therefore, you receive income, you must declare it and pay taxes on this gain through form 210. The tax varies depending on the circumstances. In many cases, you simply pay a fee of 25% of the income from the rental of the property. In the event that the house is not to be rented, the tax is paid according to the value of the property (25% of 2% of the cadastral value).

Wealth Tax

Regardless of whether you are a resident or not, you must file the Wealth Tax. You will present it as long as the following is true: 

  • When the value of the property exceeds 700,000 euros
  • The value of the property exceeds 2,000,000 euros, even if the result is negative.
  • If it is a habitual residence, it is only presented if it exceeds 300,000 euros.

Characteristics

The wealth tax varies according to the Autonomous Community. We must consult the legislation corresponding to each case. 

Mortgage expenses

In case you apply for a mortgage to the bank for the payment of the house, some costs will have to be paid to the bank. This amount is deducted from the money obtained from the loan and is usually between 0.25% and 3.00%, however, not all banking institutions tax the transaction with the same amount, it can vary from one institution to another. other.

Home insurance 

In addition to the opening commission, we must not forget to take into account life insurance and home insurance, which will be deducted from the amount of the mortgage.

In addition, you will have to pay a property appraisal. Depending on the entity that values ​​the home and its valuation, this procedure usually costs between 250 and 800 euros. The appraisal will be valid until 6 months after the date of issue.


Contact us, and our lawyers specializing in civil law will study your specific case. 

At Forcam Abogados we have offices in Barcelona, Madrid and Reus.