INFORMATION ON TAXES INVOLVED IN THE SALE AND PURCHASE OF PROPERTY IN SPAIN.


Is the “escritura” the same a a title deed in the U.K?


No, in Spain the escritura is a public record attested by a notary public. In Spain it is quite usual to have several escrituras for one property, where one would belong to the land/plot, another to the existing property or simply all in one deed.
Most properties are sold freehold and every time the property is sold and a new title deed is formulated.

If I sell my property in Spain, Alicante, will there be any capital gains tax to pay?

Yes, If you sell your property in Alicante, there is a percenteage of taxes calculated from the difference between the declared price on the title deeds to the new price on the title deeds for the property.

For non-residents there is a tax of 35% which will reduce slightly every year passed from the time of purchase, also a retention of 3% of the new declared price. (which the local town hall would calculate and return a small amount on the retention)

Residents would have to pay a rate of 20%.

If I purchase a property in Spain,Alicante, what taxes are involved in the transaction?

The purchase tax on new property is that of 8% of the full amount payed at that time.
The purchase tax on resale property is that of 7% of the rateable value (which often is lower than the market value).
If the purchaser needs a mortgage, the rateable value will be rated accordingly to the mortgage value (which will be higher than the normal rateable value).
All transactions of sale and purchase on property in Spain would require Notarization and inscription in the land registry of the town where the property is purchased or sold.

What is the position when a purchaser leaves a holding deposit on a property for sale?

The purchasers and vendors will be protected as the estate agents will comply for both parties, therefore formulating a private sale and purchase contract.
If the vendors decide to change their mind by any reason, they would have to pay back the holding deposit in double, and in the case of the purchasers not complying with the stipulations in the sales contract, they would lose their deposit on that property.
This would stop “gadzumping” or speculators that can be quite common.

If I purchase a plot of land, can I build a property on it?

This is question has an ample answer as every town slightly differs as where in some areas one needs 10.000 square meters of rural land to build, some areas 12.000 square meters or another way to build would be to purchase an old finca (normally in need of restoration) where one could also purchase less land and still build on the existing foundations.

For any building licences for extension or building pools, garages, extension etc, the real estate agent would obtain a certificate from the local town hall informing you of the possibilities on that individual property.
Taxes on purchasing land is 16% of the rateable value.

If I purchase a property in Alicante, would it be convenient to nominate a company for tax liabilities?

There are advantages depending on each individual circumstances, where often the cost of setting up a company and administering could outweigh the tax savings.
There is another way where one would declare the property in the childrens name called “usufructo” where the children would have the right of use on the property (not ownership) until both parents are deceased or want to sell. This would reduce considerably the cost for death duties.

As a resident in Spain and over 65 years old, If I sell my property and purchase another would I be liable for capital gains tax?

Any person over 65 on the title deed would be exempt of capital gains tax when selling their principle home.
Each circumstance can differ. For more information on this subject, we would need to discuss the matter further in order to obtain the best calculation for your requirements.

All transactions with Abbey Properties are lawyer conducted.

ABBEY PROPERTIES EUROPE LTD.
Patricio Ferrandiz 33c.
03700, DENIA.
ALICANTE.
SPAIN
Tel (0034) 96 5788515
E-mail: info@abbeypropertiesltd.com

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