Formalities and taxes to anticipate after buying or selling a property in Spain
Once the deed of sale has been signed before a notary, certain subsequent steps are necessary, such as the payment of taxes, the filing of the document with the public registries or the communication of the change of ownership.
Taxes and fees
A resident in Spain who sells his property at a price higher than the purchase price will have to pay IRPF (IRPF). The Tax Agency considers that the sale of a property constitutes a capital gain, which must be included in the income tax return. The percentage of IRPF to be paid depends on the amount of the capital gain, with a maximum rate of 23% for a capital gain of more than 50,000 €.
Another tax to be paid is the plusvalia municipal, or Tax on the Increase in Value of Urban Land. This tax must be paid at the town hall where the property is located. The percentage depends on the value of the property and is calculated according to the cadastral reference and the time the property has been maintained. Each municipality establishes its own rates, since it is a municipal tax. A ruling of the Constitutional Court in July 2018, confirmed by the Supreme Court, annulled the obligation of taxpayers to pay this tax in case of a sale at a loss, but it can still be demanded in case of capital gain.
On the other hand, the buyer must also pay certain taxes. He has 30 working days from the date of signature of the deed to pay them. If the sale concerns a new property, and if it is the first sale made by the developer, VAT (IVA) must be paid. The current VAT rate for the purchase of housing is 10% of the purchase price, while for subsidized housing it is 4%.
If the property is second hand, the buyer will have to pay the tax on the transfer of goods (between 8% and 10%, depending on the Autonomous Communities), calculated on the purchase price or the tax value determined by the Tax Agency.
Finally, the buyer will have to pay the tax on Documented Legal Acts. This percentage varies from 0.4% to 0.75% depending on the amount declared.
In addition to these taxes, other fees may apply, such as property registration, management fees, property valuation and other transaction-related costs.
Filing of the document with the Public Registries
Once the tax has been paid, a copy of the deed of sale is presented to the Land Registry for registration. This can be done by the notary or in person. The buyer registers the property in his name and receives a copy of the deed with the proof of payment of taxes and the change of name.
The following documents must be submitted to the registry:
- Authenticated copy of the notarial deed.
- Proof of payment of the corresponding tax.
- The last receipt of the real estate tax (IBI).
The registry carries out the necessary checks and registration takes about three weeks.
Notary fees are paid by the buyer. This includes the deed of sale and, in the case of a mortgage application, you must also pay both deeds, as well as the appraisal fees for the property.
Change of ownership
- Transfer the utilities such as water, electricity, gas and other services related to the property to your name. In the case of a direct sale by a developer, make sure that he/she gives you the necessary certificates for the subscription to the water, electricity and gas services.
- Contact the president or manager of the condominium to identify yourself as the new owner, inform him/her of the current situation and provide an address for any notifications.
- Keep all original deeds, documents, energy efficiency certificate, invoices, receipts and warranties related to your purchase, as they may be needed if you decide to sell the property.
- Check the updated property deed at the land registry. You will receive confirmation of the change in your primary residence within six months.
