How to apply the reduced rate • The tax payer, individual or company must be registered under a specific sector in the Clasificacion Nacional de Actividades Economicas - National Economic Activity Clasification. A certificate must be applied and must be presented together with the Transfer tax form. • The tax payer must state clearly that the property is not a fix asset, but a tranferrable asset. • It is imperative that it is specially stated in the Public deed of Purchase.


Buying property in Andalucia How much does it cost?


W


e have previously written about the essential aspects when buying property in Spain.


As a summary, we said how important is to check the property and its features, the location, facilities, the legal and administrative status, the licenses, the Community of Owners and so on. It is important to know that there are some costs when buying a property, which are different depending on the type of property to be acquired.


BUYING A HOUSE OFF-PLAN FROM A DEVELOPER When you buy a new house from a developer you must pay VAT @ 10% on the total price. Te VAT is paid by the buyer to the seller and the seller will pay it to the Inland Revenue or Tax Office. Additionally, when buying the property off-plan, the purchase must also pay the Stamp Duty (Impuesto de Actos Juridicos Documentados) Te tax is 1,5% of the total price


BUYING A HOUSE FROM A PRIVATE OWNER. When the house to be acquired is not a new house and it has been previously owned, the buyer has to pay the Transfer Tax (Impuesto sobre transmisiones patrimoniales), which in Andalucia is as follows:


20 / PROPERTYMAIL


400.000 euros: 8% Up to 700.00 euros : 9% Exceeding 700.000 euros 10%


Please note that there is a reduced transfer tax consisting in 3,5% of the price when the following requirement apply:


- Te price is less than 130.000 - Te house is bought as the main home - Te buyer is younger than 35 years


Tere is also a reduced transfer tax consisting in 2% for property investors which is subject to specific requirements:


Who is eligible: Individuals and Spanish companies who carry out an activity related to the real estate sector as a professional activity.


Requirements Te property acquired does not appear as a fix asset in the accountancy Te property acquired must be transferred to a third party within the deadline of 5 years as from the acquisition date. When the transfer is made within the 5 years a from the acquisition date, the possession has to be handed over to the buyer and the transfer must be subject to Transfer tax.


So, as a summary, in order to apply for the Transfer tax reduced rate, the following requirements have to be met: 1. Tat the professional, individual or company is eligible for the legislation “Real Estate Accounting General Plan” 2. Tat it is stated specifically in the public Deed of Purchase. 3. Tat the property is sold within 5 years from the acquisition date. 4. Tat the sale of the property is subject to the Transfer tax 5. Tat the asset is located in Andalucia


For property subject to VAT, please note that the rate cannot be reduced.


OTHER COSTS INVOLVED WHEN ACQUIRING A PROPERTY ARE:


• Notary fees • Land Registry fees • Legal fees, which the standard consists in 1% of the purchase price


If the buyer requires a mortgage, there would be other additional costs:


- Arrangement fees, broker fees, etc. - Notary and land registry fees - Stamp duty.


Terefore, depending which type of property you are buying and the price, the buyer would be able to calculate the costs in advance and add them to the budget.


For more information please contact us info@premierlaw.net.


We always recommend legal and tax advice, especially when buying property. Whilst every effort has been made when writing this article in accordance to the current law, please note that it does not constitute legal or tax advice.


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