Spain just LOVES property taxes


This topic contains 6 replies, has 6 voices, and was last updated by Profile photo of petej petej 4 years, 1 month ago.

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  • #57061
    Profile photo of Anonymous

    I was just reading about the costs of selling a property in Spain and I just discovered that in addition to the 18% capital gains tax that you pay you also have to pay another tax call the “plusvalía” tax.

    The plusvalía tax should not be confused with Capital Gains Tax which is a different tax altogether.

    The amount payable can vary significantly and can run into thousands of euros, particularly where a property has not changed hands for many years. The plusvalía tax is a sort of tax imposed by local authorities, and is based on the increase in the value of the land (Valor Catastral) (not the property – the selling price has no effect on the plusvalia tax) from the date the owner acquired the property to the time of the present sale.

    The plusvalía tax has no relationship to the selling price of the property.

    Your local town hall can give precise figures for the plusvalía tax for an individual property.

    The plusvalía tax itself will ordinarily be payable by the vendor (the seller). This makes sense since the sum payable will be higher where the vendor has owned the property for a long time, something which the purchaser should not be penalised for. Unfortunately however there are occasions where a purchaser signs a private contract in advance of signing the Escritura which states that the purchaser will pay the plusvalía tax. An even worse scenario is that of the purchaser who buys from a vendor who then returns to his home country without paying the tax. Where no retention is made by the purchaser it will fall to the purchaser to pay the amount due, commonly plus interest and penalties, in order to prevent the unpaid amount being recorded as a debt against the property.

    For the past three years it has been Spanish law that the plusvalia tax must be paid by the seller.

    The values are certainly high in Benalmádena. I know someone who recently sold a small apartment in the Gamonal which he had owned for ten years and the plusvalía tax was just over €4.500.

    The apartment block was old and run down but the plus-valía is based upon the increase in the value of the land which has been fairly substantial over the years.

    If you are selling your property at a loss this will not affect the plusvalía tax due as the valor catastral has no relationship to ACTUAL values, paid in the past, or achieved now. AMAZING!

    Here is an example of someone who sold recently:

    An apartment cost the equivalent of €74,250 in pesetas in 2002. Due to the economic decline the final sale price agreed was €60,000, so clearly a LOSS. Despite that I had to pay TWO taxes based on an INCREASE in value.

    In fact, after all costs and taxes deducted, I actually received €53,268 or 11% less than Sales Price.

    The costs paid are as follows, all in Euros (€);

    Legal Costs: 1,274.40
    Estate Agent: 2,124.00
    Retention for estimated Local Rates: 300.00
    Plusvalia (Tax to Local Council): 1,234.24
    Capital Gains Tax (3% to non-residents): 1,800.00

    My solicitor says I can reclaim the 3% Capital Gains Tax but it ‘might take up to 18 months’ to recover!

    The 3% CGT withholding tax is a disgrace, does Spain no favours and in a falling market means they have to pay it back – eventually! Spain could drop this piece of discriminatory fiscal policy otherwise the EU Commission might do it for them.

    Did you also know that Capital Gains Tax has increased recently from 18% to 19% and now stands at 21%!

    As from January the 1st 2012 Capital Gains Tax (CGT) for non-resident property owners in Spain will stand at 21% across the board. This follows a previous rise in 2010 from 18% to 19%.

    In 2007 the European Union put pressure on Spain to lower the then CGT rate of 35% for non residents (15% for residents) to 18% – deeming it to be an unfair penalty on non-residents. A rise of 1% in 2010 passed relatively unnoticed but shows a worrying trend towards accelerating tax increases to boost the dwindling economy.

    Spanish Residents will also feel the sting with figures rising to 21% up to 6000 Euros (Eu), 25% between 6001 Eu and 24000 Eu and 27% on higher figures.

    Spain just LOVES property taxes.

  • #112139
    Profile photo of katy

    The 3% isn’t a capital gains tax, it is a retention against unpaid taxes. Was introduced because so many non-residents skipped the country owing CGT, and local council taxes.

    Agree generally though about the plus valia and other taxes. Find it difficult to believe that someone would have to pay 4500 plus valia for an apartment in gamonal. We paid less than that on a villa owned 11 years in marbella!

  • #112140
    Profile photo of Anonymous

    Is this “retention against unpaid taxes” paid by the seller (vendor), I did read somewhere that it is the buyer who takes this amount from the purchase price of the property and passes it onto the tax authorities.

  • #112142
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)

    @jakesuper wrote:

    Is this “retention against unpaid taxes” paid by the seller (vendor), I did read somewhere that it is the buyer who takes this amount from the purchase price of the property and passes it onto the tax authorities.

    buyer is to withold 3% and plus valia normally.

  • #112143
    Profile photo of Anonymous

    Jakesuper, you are so misinformed 😥 😥 ; anyway you cant afford to move here; your budget is what most here spend on eating out 😆 😆 😆 😆 😆

  • #112151
    Profile photo of GarySFBCN

    So it cost 11% when you sell a place?

    You think the government should waive their portion because you lost money?

    I guess you also think the real estate agent should also work for nothing because you lost money.

    Maybe I am jaded by living in the US, but I find the annual property taxes in Spain ridiculously low. So when it comes time to sell, I will not mind paying the fees and taxes you listed.

  • #112339
    Profile photo of petej

    If you are from the UK most European property buying/selling taxes seam high, I think in France the CGT rate has gone up to around 35% for property owners 😥

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