Taxation is one of the aspects that generates the most questions among foreign citizens who decide to invest in the Spanish real estate market. Whether the goal is to buy a property in Torrevieja or sell an existing one, understanding the applicable taxes is essential to avoid mistakes, penalties, or unexpected costs. The Spanish tax system can be complex for those unfamiliar with it, so having the right information beforehand makes all the difference.

At the time of purchase, taxes vary depending on the type of property. If it is a resale property, the buyer must pay the Property Transfer Tax (ITP), the rate of which depends on the autonomous community. In the case of newly built properties, VAT applies, along with the Stamp Duty (AJD). These taxes must be paid within the legal deadlines established after signing the deed.

In addition to acquisition taxes, there are other associated expenses that, while not taxes themselves, affect the total cost of the transaction, such as notary fees, registration fees, and, in some cases, professional fees. For this reason, it is important to accurately calculate the budget before finalizing the purchase.

Once a property is acquired, foreign owners must comply with certain annual tax obligations. Non-residents are required to file a Non-Resident Income Tax (IRNR) return, even if the property is not rented out. If the property is rented out, the income generated must also be declared in accordance with current regulations.

At the time of sale, the foreign owner must declare the capital gain. Spanish law stipulates that the buyer withholds 3% of the sale price as an advance payment of the corresponding tax. Subsequently, the seller can regularize their tax situation by requesting a refund or paying the difference, if applicable.

It is important to note that many countries, including Spain, have double taxation treaties, which can affect the final tax liability. However, these treaties do not eliminate the obligation to comply with Spanish tax regulations.

Proper tax planning and expert legal advice make buying or selling a home in Spain a safe, transparent and uncomplicated process for the foreign owner.

Contact A&G Lawyers and receive personalized tax advice to buy or sell your home in Spain with complete peace of mind.