The capital gains tax (Impuesto sobre Increment de Patrimonio de la Venta de Bien Inmeuble) is calculated on the profit from the sale of some real estate in Spain – and not just the property. You have to pay these types of capital gains tax (CGT) when it derives a profit from the sale of objects antiques, art and jewellery, stocks and shares and also from property and businesses.
When you’re buying a property or a business, you have to be very careful that the purchase price stated in the contract (escritura) is not too low. Although it is illegal, it is common practice in Spain for the seller exhibit a very low price in escritura, so he pays less tax CGT wants to sell it when possible.
However, this is beginning to change. If you, as a buyer, accept worth buying low, you will be seen as the loser. In the time of sale seems to have got a capital far greater than what you have, you will be required to pay more taxes.
Note, however, that you can not find someone willing to sell a commercial if it refuses to compromise any stated price. Get advice from your lawyer In order to reach a satisfactory compromise.
There are some situations where it is required to pay the capital gains tax.
If you are a resident in Spain, and if you have 65 years or more, you will be exempt from CGT. The residents under 65 are exempt from paying the fee CGT, but on the condition that the property they are selling is their principal residence, having lived there for three years and they have plans to buy another house Spain within three years.
Transfer Fee property
If you’re legally incorporating a business or buying a property, you will also be subject to a regional tax, called Impuesto de Transmisiones y Actos Patrimoniales Jurídicos Documentadas on the following types of transfer:
- Business Transfers: you must pay the 1% of the bank deposit made for your company within 30 working days from incorporation of the company.
- Cast and Revaluation: you have to pay transfer taxes at the same rate on any merger or an increase or decrease of the share capital.
- Transfers of property and land: the resale of property taxes requires a transfer rate which is usually of 6% of the purchase price stated in the contract, although it varies from one autonomous community to another.
Remember that all the parties may decide to declare a value much lower than the real value, to reduce this tax, but, if its declared value is significantly lower than expected, tax inspectors can be alerted and can impose heavy penalties to those who operate illegally.
Ask your lawyer advice and ask to check through the tax office the average market value for the property you intend to purchase. If you’re buying a new property, you will not have to pay transfer fees, but you will have to pay 7% of the purchase price in the form of VAT, since it is seen as a business transaction between the user and the manufacturer.
You also need to pay a tax on the increase in the value of the land from the time of last sale. That depends on what you buy and how much time has passed since then. The official value of the land is always lower than the market value and you can find out what this fee can amount going to a local tax office, where there are acts for each property and where the staff can tell you what the appraised value of the land.