The Key to Your Dream Home
THE LEADING FINANCING EXPERTS IN SPAIN
LEARN MOREWhen you buy a property in Spain, it is important to make sure you are informed of all the taxes in advance. Many people are caught out by laws they are not necessarily aware of and this can result in more tax being paid. Professional guidance will prove invaluable.
In order to make sure you are fully informed, following is some information that may be of interest to you:
Most foreigners moving to Spain or buying a property here, understand that they will have to pay Spanish taxes such as income tax, capital gains tax and inheritance tax. Not everyone, however, is aware that non-residents buying in Spain must also pay wealth tax in Spain, rather than in their country of residence.
Spanish Wealth Tax is payable by both residents and non-residents (if they own property in Spain), although the rules are different. Residents pay wealth tax on their worldwide assets but have quite generous tax-free allowances, whereas non-residents are only liable for their net assets within Spain but miss out on some of the allowances that tax residents benefit from.
Non-residents are entitled to an individual deduction of €700,000 per person. So, for example, a non-resident married couple buying a property in Mallorca, Ibiza, Menorca (or in another region of Spain) will have a combined tax-free allowance of €1,400,000 on their total net estate.
The wealth tax is calculated on net assets, which means you can deduct the mortgage too, therefore considerably reducing the tax paid each year.
The current wealth tax rates are applicable to each persons individual net wealth, the higher the price of the property, the more you are taxed, with a cap set at 3,45% per year for properties in excess of € 10,9 Mio! As stated above, the first €700,000 is the national tax-free allowance per person.
The current wealth tax rates are applicable to each person´s individual net wealth on 31st December of each year, after all relevant deductions are made are as follows:
| From € | To € | Tax Rate % | Tax Band € | Cumulative Tax € |
|---|---|---|---|---|
| 0 | 170.472 | 0.28% | 477 | 477 |
| 170.472 | 340.937 | 0.41% | 699 | 1.176 |
| 340.937 | 681.869 | 0.69% | 2.352 | 3.529 |
| 681.869 | 1.336.739 | 1.24% | 8.120 | 11.649 |
| 1.336.739 | 2.727.479 | 1.79% | 24.894 | 36.543 |
| 2.727.479 | 5.454.958 | 2.35% | 64.096 | 100.639 |
| 5.454.958 | 10.909.915 | 2.90% | 158.194 | 258.833 |
| 10.909.915 | Onwards | 3.45% |
As with the wealth tax, inheritance tax is also applicable for non-residents and residents in Spain. Each autonomous area (region) sets its own rules concerning inheritance tax for non-residents, but unlike in many other countries, in Spain it is the recipient or beneficiary that pays the tax.
Due to there being many different rules in relation to inheritance and gift tax, we recommend each individual case is consulted with a tax advisor, our team can recommend good tax advisors if requested.
Many law firms advise non-resident clients to draw up a will before a notary solely for their assets in Spain as this considerably simplifies the inheritance process if and when the time arrives.
The value of the property will be reduced by the mortgage in order to avoid tax payments but only if the mortgage is in place at the same time as the purchase! So, it makes sense to seek financial support at the very beginning, even if you have the funds to purchase the property.
In addition, it is difficult in Spain to release equity at a later stage, therefore it makes sense to seek for financial support at the time of purchase for various reasons:
We always recommend our clients to finance as much as possible upon completion in order to obtain all the benefits. A mortgage for spanish property is deductible when it is set up upon completion or during a short period of time after the purchase (a few months). In Spain it has to be linked to a Spanish property to be deductible for tax purposes. Banks are not as keen to set up a mortgage after the purchase, so it is always better to have it all prepared to sign at the time of purchase at the notary.
The property value taken into account for wealth tax purposes is the highest of the following three values:
The same values / rules apply for inheritance and gift tax purposes in Spain.
In properties of a higher value, not only are the savings linked to the wealth tax important, but clients must also take into consideration that with the low interest rates available today it makes much more sense to mortgage and obtain an important return on propery investment in Spain by investing the funds, with the possibility of easily cancelling the mortgage in years to come if the interest rates were to go up.
1. USER INFORMATION
Lionsgate Capital S.L., from now on RESPONSIBLE, is Responsible for the User's personal data treatment and informs you that this data will be treated in accordance with the current personal data protection Legislation, the Regulation (UE) 2016/679 of 27th April 2016 (RGPD) relative to the physical person in respect to the treatment of personal data and free circulation of this data and the Organic Law (ES) (LOPD) relative to the data protection of personal character/nature, the following treatment information is available:
Treatment purpose: maintain a business relationship with the User. The operations planned to accomplish the treatment are:
- Submission of commercial advertising communications by email, fax, SMS, MMS, social communities or any other electronic or physical means, present or future, that enables commercial communications. These communications will be made by the RESPONSIBLE and related to its products and services, or to its collaborators or suppliers with a promotion agreement has been reached. In this case, third parties will never have access to personal data.
- Carry out statistical studies.
- Process orders, requests or any type of petitions that are made by the user through any of the contact ways that are available.
- Forward the newsletter on the website.
Data conversation criteria: this will be kept while there is a mutual interest to maintain the aim of the treatment and when it is no longer necessary for this purpose, it will be eliminated with adequate security measures to guarantee the pseudonymisation of the data or its total destruction.
Communication of the data: data will not be communicated to third parties except by legal obligation.
Rights of the User:
- Right to withdraw consent at any time.
- Right of access, rectification, portability and deletion of your data and the limitation or opposition to its treatment.
- Right to submit a claim to the control authority (agpd.es) if it considers that the treatment does not comply with current regulations.
Contact information to exercise your rights:
Postal address: C/ Constitución 1, 1º, 07001 Palma de Mallorca, Illes Balears
Email: info@lionsgatecapital.com
2. OBLIGATORY OR OPTIONAL CHARACTER OF THE INFORMATION PROVIDED BY THE USER
Users, by marking the corresponding boxes and entering data in the fields, marked with an asterisk (*) in the contact form or presented in download forms, expressly and freely and unequivocally accept that their data is necessary to meet the request, by the provider, being voluntary the inclusion of data in the remaining fields. The User guarantees that the personal data provided to the RESPONSIBLE person is true and is responsible for communicating any modification of them.
The RESPONSIBLE informs and expressly guarantees users that their personal data will not be transferred in any case to third parties, and that whenever they make any kind of transfer of personal data, the express, informed and unequivocal consent of the Users will be requested in advance. All data requested through the website are mandatory, as they are necessary for the provision of an optimal service to the User. In case all the data is not provided, it is not guaranteed that the information and services provided will be completely adjusted to your needs.
3. SECURITY MEASURES
According with the provisions of the current regulations on personal data protection, the RESPONSIBLE is complying with all the provisions of the regulations RGPD and LOPD for the treatment of personal data and their responsibility, and manifestly with the principles described in the article 5 of the RGPD and in the article 4 of the LOPD, by which they are treated in a lawful, loyal and transparent manner in relation to the interested party and adequate, pertinent and limited to what is necessary in relation to the purposes for which they are treated.
The RESPONSIBLE ensures that it has implemented appropriate technical and organisational policies to apply the security measures established by the GDPR and the LOPD in order to protect the rights and freedoms of the Users and has communicated the appropriate information so that they can exercise them.
