Foreign real estate investors may, from September 27th, 2013, obtain the Spanish residence permit through the purchase of one or several houses, provided that the amount is equal to or greater than € 500,000. The Spanish residence permit "Gold Visa" will allow the foreign investor to reside in Spain and travel throughout Europe, thus promoting the Spanish real estate market.
The Immovesla team can help you get the Spanish residence by answering all your questions and putting you in touch with a specialist who can help you find the best solution to quickly obtain Spanish citizenship by residence.
To obtain this gold visa, investments must meet one of the following conditions :
What taxes do non-resident foreigners have to pay to buy or sell their home in Spain
The number of non-resident foreigners who purchase a home in Spain has been increasing steadily since 2010, although the weight they have in total purchases is low: they represented 1.28% in the third quarter of 2014, according to the figures of the Ministry of Development. However, they also sell these properties and, as in any transaction, you have to comply with tax obligations. What taxes do you have to pay for the acquisition and sale of a property?
When a person, whether they be Spanish or a foreigner, decides to buy a home, they must know that they’re not only going to have to pay the price for it, but also for other compulsory expenses, such as the appraisal of the house or taxes that apply to this transmission. Both national and foreign individuals pay exactly the same taxes for buying a house. The difference comes from the taxes to pay for selling it. The non-resident foreigner will have to tax the Non-Resident Income Tax (IRNR). And in the event that the foreign seller is not in Spain, as an exception, the municipal capital gains will have to be paid by the buyer.
Taxes levied on the sale of a flat
The vendor that doesn’t reside in Spain will have to pay various taxes: the Non-Resident Income Tax (IRNR) and the Tax on the Increase of the Value of Urban Land (IIVTNU or capital gains).
- The IRNR
The tax reform that has been in effect since January 1st affects the non-resident as a citizen, as it has brought changes to the IRNR. Monetary adjustment coefficients have disappeared, which served to correct the effect of inflation on the value of real estate, which means that it will no longer be taken into account that a euro today doesn’t have the same value as it did ten years ago.
Regarding the abatement coefficients, they can only be applied with an overall limit of EUR 400,000 for transmissions carried out after 2015, whether they are homes, stocks or any other type of movable or immovable property acquired before 1994. Above this limit, it shall cease to be applied and it shall be taxed for all capital gains generated by the sale of the house. The percentage to be applied depends on the year of acquisition and the type of asset. This coefficient intends to deduct part of the enormous revaluations of the oldest houses from the capital gains.
In short, when the sale of a house occurs in an environment where the sale of all goods does not exceed EUR 400,000, the capital gains generated by the sale of a home generate a lower tax payment due to the reduction of the tax rate that rules them. However, when the sale of a house and the rest of the property exceeds the limit of EUR 400,000, taxation is worse for the taxpayer.
The tax rate that non-residents apply to the transfer of real estate in 2015 will be 20%, and in 2016, it will be 19%. Lets look at an example of the amount that a non-resident has to pay for the IRNR :
A non-resident foreigner bought a home in Spain in 2000 for EUR 120,000 and sold it in early 2015 for EUR 300,000. The gross equity gain is EUR 180,000, on which we must apply 20% of taxes, this means the payable tax rate is EUR 36,000.
Finally, this tax rate can be reduced by retention. There is an obligation for the buyer to apply a withholding tax of 3% on the agreed sale value to prevent the non-resident from leaving the tax unpaid. As Elena Serrano points out, “most of the time, it’s not easy to locate a non-resident, hence imposing that obligation on the buyer.”
- Municipal Capital Gain
The Tax on the Increase of the Value of Urban Land (IIVTNU), better known as the municipal capital gain, is another one of the taxes that any foreigner that sells his/her house in Spain has to pay, just like any other citizen. The sale of real estate also generates the municipal capital gain due to the increase in the value of the land. That is why you have to find the difference between the value of the land at the time of sale and at the time of acquisition. On this difference of value, the tax that depends on the municipality/city where the house is located will apply. It must be paid within 30 days after the sale closes.
However, as Elena Serrano recalls, in the event that the seller is not in Spain, the buyer will be responsible for the payment, as a substitute to the taxpayer.
Taxes levied on the purchase of a house
There are two different taxes depending on whether the house is new or second-hand
- New house
The tax levied on this property is 10% VAT. Therefore, in a housing of EUR 250,000, the tax will be EUR 25,000.
- Used house
The tax levied on this type of property is the Transfer Tax (ITP) and varies depending on the Autonomous Community, but oscillates between 5% and 10% of the price charged (between EUR 12,500 and 25,000 for the example above). It should be remembered that the tax collector can claim a higher payment from the buyer if it considers that the home is worth more than what it has paid for it. The tax collector of each CCAA has minimum price tables and, with them, they calculate the minimum ITP that a person has to pay when buying a house.
Thus, whoever buys a second-hand home and is not well informed, can be found in the situation that, after paying 7% of what has been spent in the house to the tax collector, it asks for the payment of a supplemental amount of ITP. This amount would be 7% of the difference between the value for which the house was sold and the minimum value that the house has in the eyes of the tax collector, plus the corresponding interest due to the delay in payment.
For example, if we buy a flat for EUR 250,000, we should pay EUR 17,500 per ITP. If the tables show that the house has a minimum price of EUR 300,000 and that corresponds to a minimum ITP of EUR 21,000, the payment of the difference will be claimed: EUR 3,500 plus interest.
Regarding the ITP in some CCAA, there are bonuses for large families. For example, in the Community of Madrid, the rate at which the ITP is taxed is 4% for large families, provided that it’s the usual dwelling.
The purchase of both new and used housing, if made by mortgage, is subject to the payment of another tax, which is the Legal Documents Act (AJD), which represents about 1% of the book value of the sale and another 1% of the book value of the mortgage.
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