What taxes do I have to pay when buying or selling a house in the Costa Brava as a foreigner?
Buying or Selling a house in the Costa Brava
It’s a fact: the number of foreigners non-resident in the country who decide to buy a property in Spain has not stopped rising since 2010, according to the Ministry of Development. But not only do they buy, but they also sell and, like everyone, they are also subject to tax obligations. In this article, we are going to inform you about the taxes that must be paid for the purchase or sale of a house in the Costa Brava, because like the Spanish, foreigners must not only face paying for their new house, but they will also be forced to take into account the money to face another type of expenses: taxes.
Foreigners pay the exact same taxes as the Spanish when buying a house. The only differences that occur are in the taxes that non-resident foreigners pay for the sale of their properties in Spain.
Differences in taxes to be paid for the sale
In the case of non-resident foreigners, they will have to pay taxes for IRNR (Renta de No Residentes or Non-Resident Income Tax). And, exceptionally, if the foreign seller is not resident in Spain, the municipal capital gain must be paid by the purchaser, although the first option is the vendor.
- The IRNR. We must bear in mind that, if the sale of a house does not exceed 400,000 euros, the capital gains from a sale of a property will have a lower tax burden, and this is due to a decrease in the tax rate. However, if it exceeds 400,000 euros, the tax burden is higher for the taxpayer.
The value of the tax burden applied by non-residents to the transfer of ownership of real estate is 19%.
This load can be mitigated by retention. We are obliged to request that the buyer puts a 3% withholding on the agreed value of the sale, with the intention of preventing the non-resident from not paying the tax if it is not possible to locate them.
- The municipal capital gain or Incremento del Valor de Los Terrenos de Tipo Urbano is another tax that foreigners not resident in Spain must pay if they sell their properties, as is the case with other citizens. This tax is calculated according to the increase in the price of the land, so the cost of the land is taken into account when the property is bought and sold. The tax payable applies to this difference, which is determined by the municipality in which the property is located, and which we must remember to pay within 30 days of the sale.
Even for a Spanish person, the sale of a home in the Costa Brava can cause doubts and uncertainties regarding the performance of unfamiliar procedures, not only from an organisational and technical point of view but also from the legal point of view, in which case we turn to a real estate agency for assistance. It is obvious that, for a non-resident foreigner, it is essential to have the advice and help of an experienced professional during the whole process, as in this way all the procedures can be carried out more smoothly and without any surprises.