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:
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% |
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.
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