Shining a spotlight on Marbella’s real estate tax
With sun, sea and the seductive Spanish lifestyle, the coastal city of Marbella is an excellent investment destination, both for Arabs looking to purchase a second home and for Europeans planning to retire. Before you take the plunge though, make sure you’re up to speed on the latest tax requirements and avoid any surprises later down the line.
1) Transfer Tax
Regardless of nationality, you must pay transfer tax on resale property at 8% to 10% of the new title deeds value. Transfer Tax (Impuesto sobre Transmisiones Patrimoniales: ITP) is payable by the purchaser of second-hand houses, apartments, commercial premises, garages and plots. The tax is scaled as follows:
|Up to 400.000€||8%|
|Between 400.000€ and 700.000€||9%|
|More than 700.000€||10%|
On a new property, you pay IVA (VAT) at 10%, plus 1.5% stamp duty – relatively straightforward. You – the buyer –, the Notary Office where the deed was executed or the agent can pay the taxes. Simply select the desired procedure and away you go. Make sure you pay the transfer tax and stamp duty within 30 days of the deed due date, however, as any delays will levy surcharges.
2) Capital Gains Tax (CGT)
When selling, as of April 2016, you must pay CGT of 19% on any increase in title deeds value. In addition, all non-residents are required to pay a 3% retention on the day of completion. When buying, don’t let the seller intimidate you into listing the sale price as being lower than you actually paid as it may cause legal problems later on. Listing a lower sale price than you paid can also increase your own CGT when you come to sell. This is because CGT is paid on the profit of selling your home, or the difference between the listed purchase price and the listed sale price. A good example is as follows: you buy a property for EUR 200,000 and sell it for EUR 250,000, meaning you pay CGT on EUR 50,000. If you previously accepted to list the purchase price as EUR 150,000, however, you must then pay CGT on EUR 100,000 – bad news all round.
3) Plus Valia
The local town hall charges Plus Valia municipal tax on properties as they are sold.This is applied on the increase of the property’s value between the prior purchase (i.e. the seller’s purchase) and the current sale, making the length of ownership one of the key variable factors for calculating this tax. The purpose is to tax the increase in the value of the land on which the property stands. The base for this tax is the valor catastral, an administrative value that is usually lower than the market value.
For information on investment opportunities in Marbella, including in La Bajadilla fishing port, which will soon be upgraded into an ultra-modern marina and cruise-ship terminal, call Oryx World Portfolio today on +971 (0) 4 446 2000.
This article offers general information on property taxation in Marbella. It does not constitute legal advice. Please consult a local law firm or tax specialist for specific legal advice.