To buy as Private or as Company ( Sociedad Patrimonial SL)

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This topic contains 14 replies, has 6 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 4 months ago.

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  • #51974
    Profile photo of Anonymous
    Anonymous
    Participant

    Hello anybody there,

    I would like to know where I can get more information about the differences (in terms of Tax, deduction, resales tax, etc) between buying as private person or as Limited company.

    I have not found a web or a book explaining it but several has told me that it is convenient to buy as Company (SL) when the value is over 500.000 euros.

    Thank you in advance for anybody answering me.

    Un saludo

    Roberto

  • #63429
    Profile photo of Anonymous
    Anonymous
    Participant
  • #63430
    Profile photo of flw
    flw
    Participant

    Buying through a company to save in Capital Gains Tax is not an option anymore, as the new Income Tax Law for 2007 (IRPF) abolishes these types of companies. After Jan 2007 any profit made will be taxed at a standard 30% corporate tax.

    This, together with the fact that Capital Gains Tax for non residents will be reduced from the current 35% to 18%, makes the use of property holding companies completely unattractive for purchasers thinking solely on saving in Capital Gains Tax.

    However, there are still other advantages in incorporating a company to purchase property, like reduced annual running costs for properties over €450,000, inheritance tax mitigation and confidentiality.

    If you wish I can send you a PDF document that analyzes all this.

  • #63432
    Profile photo of flw
    flw
    Participant

    @mark wrote:

    Read this:

    http://www.spanishpropertyinsight.com/spanish_property_doctor_140506.htm

    Mark

    Mark, very interesting analysis!

  • #63521
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear Mark

    thank you for your prompt reply. It seems that the option “to buy through a company” is less and less interesting.

    You information was very important to us ! 😀

    Regards

    Roberto

  • #63524
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear Inigo
    thanks for your information. 😀

    In fact one of the reason why we have considered to buy through a company is because of the following configuration:

    MORTAGE
    – we are going to get a mortage by a Spanish Bank

    COSTS
    – the interest to pay on annual basis are about 25.000€
    – we are going to have about 20-30.000 € of extra cost for extra building
    – as non resident we are to going to be subjected to other tax (Patrimonial ?!?)

    INCOME
    – we are going to rent part of the house for 20.000€/year

    DEDUCTION
    Being non-resident we cannot deduct anything in Spain and therefore we thought that as Spanish company we could do it.

    May be not. what is your opinion? 🙄

    Thanks in advance

    Best regards

    Roberto C. 😀

  • #63525
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear RobertoC

    Can I ask what is your age? I know it is a personal question but it may be pertinent to what you are asking.
    The legal brains of the forum (Mariadecastro, Cesar and Drakan) could perhaps assist with this one.

    As far as I knew, (and this info may be somewhat dated!) there were certain reliefs on capital gains tax/home credits for people over 65 who were official residents in Spain.

    Perhaps, Cesar, Drakan or Mariadecastro could clarify?

    Katerina

  • #63526
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear Katerina

    I far below 65 and not resident (yet) .

    regards

    Roberto C.

  • #63528
    Profile photo of Anonymous
    Anonymous
    Participant

    😆 No offence caused I hope!!

    I am sure our legal eagles will be able to guide you to the right direction.

    Good luck

    Katerina

  • #63543
    Profile photo of Anonymous
    Anonymous
    Participant

    Some Comunidades Autónomas have special deductions for people older than 65 as we do have here in Asturias but nothing related with housing that I’m aware of except on protected dwelings.

    I’ll do a little research and let you know if something comes…

    … Well, yes if you are older than 65 and you sell the house you ‘officially’ live in (you have lived there at least for the last 3 years and one day) you wont pay income taxes in IRPF, but plusvalía… (the town hall tax) I guess there is no special deduction… I’ll have to review this.

    Cesar

  • #63545
    Profile photo of Anonymous
    Anonymous
    Participant

    Dear Inigo,

    I manage a UK company which owns a house near Altea. Would the change in the law of 2007 have an effect on the taxation of any profit made if we sold after this new law? Could you please be so kind to dend me the PDF also to teryhelvetia@aol.com

    Kind Regards

    Terry English

  • #64007
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi all again

    any idea if we can deduce the mortgage interest from the income produce by renting in case the house belong to a SL ?

    thank you

    Roberto C.

  • #63812
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi all again

    any idea if we can deduce the mortgage interest from the income produce by renting in case the house belong to a SL ?

    thank you

    Roberto C.

  • #64032
    Profile photo of flw
    flw
    Participant

    Sorry for the late reply, I had lost sight of this thread.

    @RobertoC wrote:

    …any idea if we can deduce the mortgage interest from the income produce by renting in case the house belong to a SL ?

    The answer is yes. You will be able to deduct as costs all the interest generated by your mortgage, together with any other fees & taxes involved in the purchase. If the property is new, your company will also be able to claim the 7% VAT paid on the purchase (for this to be possible, the deeds must include a clause saying that the property will be used solely for business purposes). If it’s second hand, transfer tax will be deductible.

    Please make sure to collect all the invoices.

    @RobertoC wrote:

    – we are going to have about 20-30.000 € of extra cost for extra building

    You will be able to amortize this amount, together with the property capital at a maximum yearly rate of 2%.

    If you are planning to buy through a company, I don’t recommend that you attempt a “DIY” purchase, the subject can be really tricky. I would seek the help of a lawyer with enough experience on these types of transactions.

    @terryhelvetia wrote:

    I manage a UK company which owns a house near Altea. Would the change in the law of 2007 have an effect on the taxation of any profit made if we sold after this new law?

    Certainly. The concept of “property holding company” will no longer exist on 2007, and the profit made on the sale of a property owned by a company will attract corporate tax just as any other income (typically 30%).

    During a limited period of time you will be able to dissolute the company and not pay Transfer Tax, Stamp Duty or Plusvalía, as described here (article in Spanish)

  • #64054
    Profile photo of Anonymous
    Anonymous
    Participant

    Great , thank you very much !!!!

    Roberto C. 😀

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