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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
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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.
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@mark wrote:
Read this:
https://www.spanishpropertyinsight.com/spanish_property_doctor_140506.htm
Mark
Mark, very interesting analysis!
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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 BankCOSTS
– 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€/yearDEDUCTION
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. 😀
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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
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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
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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
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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)
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