Purchase costs & Taxes - Buying a property in Spain
AMENDMENT NOVEMBER 2021
LEGAL REPORT ABOUT THE NEW ACT OF CEDED TAXES OF ANDALUCIA.
The Andalucian Parliament has recently approved a new Act about the Ceded Taxes of Andalucia which means reductions in the tax rates and new deductions in different taxes like the Property Transfer Tax, the Stamp Duty, the Income Tax, the Inheritance Tax and the Wealth Tax.
The new Act will enter into force on the next day after the publication in the Official Journal of Andalucia, which is expected to take place in November 2021, however, some of the new measures especially the ones regarding the deductions for the Income Tax will enter into force on the 1st of January 2022.
Below is a legal report supplied to Spanish Property Choice & The Garners of Channel 4, Sun, Sea and Selling Houses by a legal 3rd party who deals with such matters on a daily basis, about the main new measures which you can find below.
1.- Applicable law.
Act of Ceded Taxes of Andalucia. approved by the Andaluian Parliament on the 13th of October 2021.
2.- Main changes and reductions of taxes in the new regulation.
a) Property Transfer Tax and Stamp Duty (Impuesto sobre Transmisiones Patrimoniales y
Actos Juridicos Documentados:
In the case of the Property Transfer Tax, taxation will be for a single rate of 7% in the same cases where it was previously 8%, 9% or 10%. The tax on rentals will be taxed at 0.3%.
In the option of Stamp Duty Tax, the tax rate will be 1.2%.
There was a Decree which was approved by Junta de Andalucia in April 2021 due to the pandemic situation according to which they reduced temporarily the tax rate of Transfer Tax to 7% and the tax rate of Stamp Duty to 1.2% but this was a temporary measure, which was expected to be in place until the 31st of December 2021. However, due to this new Act which has been approved, the said reduction of the tax rates respectively to 7% and 1.2% will not be temporary and it will be in force since the 1st of January 2022.
The Property Transfer Tax for the purchase of habitual residences with a value of less than €150,000.00 will be lowered to 6% tax.
The price limit for applying the benefit in the reduction of the tax rate when the purchaser of habitual residences is a large family or a disabled person will be increased from €180,000.00 to € 250,000.00.
b) Inheritance Tax.
The Inheritance tax is also being changed in some respects. Thus, pre-existing patrimony of the heirs will not be taken into consideration and the coefficients will not generally exceed 45%.
Partners or de facto unions are fully equal to spouses, as long as they are duly registered in the Official Registers.
Inheritances in favour of siblings, aunts, uncles and nephews, which until now could pay a tax rate of 70%, are reduced to the maximum limit of 45%.
When the inheritance received is a habitual residence, the tax scale is changed from 95% to 100% depending on the value of the property to a single rate of 99% in all cases.
The reductions in the economic donation to descendants for the purchase of their habitual residence will also be made more accessible. It will no longer be a requirement to be the buyer's first habitual residence in order to apply the benefit. The limit to which it applies increases from €120,000.00 to €150,000.00 at a general level and from €180,000.00 to €250,000,00 when the donation is made to a person with a disability.
c) Wealth Tax.
The Junta de Andalucia will follow the same tax scale as the State, except in the last part, where it will keep the 2.5% rate and the increase to 3.5% made at national level will not be implemented.
People with disabilities will be able to benefit from the rest of the modifications introduced in this tax. The exemption amount increases, for people with a disability of between 33% and 65%, from €700,000.00 to €1,250,000.00 per year. The said limit of exemption rises to €1,500,000.00 in the case of persons with an even greater degree of disability.
d) Income Tax.
The new reduction in the personal income tax bracket means that the tax pressure for Income Tax will be three points less compared to the tax rate three years ago. In 2018 taxation ranged between 10% and 25.5%, and now it will be between 9.5% and 22.5%.
New rules about the family deductions:
Deductions for a new child in the family, whether by birth or adoption, will be €200.00. The amount will be doubled when it occurs in towns with less than 3,000 inhabitants.
On the other hand, the deductions for large families will be €200.00 for those in the general category and €400.00 for those in the special category.
As for deductions for expenses in English or computer academies, married couples with an income of up to 80,000.00€ will be able to recover 15% as long as they do not exceed €150.00 per child.
Hiring a domestic employee will also be rewarded with a tax deduction of up to 20%, up to a maximum of €500.00 euros per year.
New rules about deductions for properties:
The most relevant new regulation is the increase in the maximum allowable deductions from €19,000.00 per year to €25,000.00 per year when the tax return is made individually and from €24,000.00 per year to € 30,000.00 per year when the same tax return is made jointly.
Young people, specifically purchasers under the age of 35, will get an increase in the deduction for the purchase of a primary residence when it is a protected property. The deduction will be increased from 2% to 5%.
As for deductions for renting a primary residence, this will rise to 15%, with a ceiling of €600.00 per year for those under 35, over 65 and victims of gender violence or terrorism. In the case of people with disabilities, the maximum rises to €900.00 per year.
e) Special Tax On Determined Vehicles:
Taxes for means of transport at 16.9% and 13.8% respectively will fall to 14.7% and 12%, respectively.
This legal report has been supplied exclusively to Spanish Property Choice by Delatorre Solicitors
Mr. Jose Angel DE LA TORRE MORAN Tel/ Fax: ( 34) 950 081 495
Mobile:( 34) 625 678 042
AMENDMENT TO TRANSFER TAX 28th April 2021.
The Andalusian Government has approved a REDUCTION in the Property Transfer Tax and the Stamp Duty for the purchase of properties in Andalusia.
Here in Spain the purchase costs, on-costs as they are known locally could be between 9% and 17% over and above the purchase price depending on what part of Spain you are looking at. Here in Almeria it is 9% on-costs on an average sale unless you require a mortgage and then you need to add between 1or 2% extra for bank set up fees.
Spanish Property Choice Real Estate S.L. Specialise in both inland and coastal properties in the Almeria region!
We advise our clients to add 9% onto any purchase price which covers - 7% Transfer Tax, Notary Fees, Land Registry Fees and Solicitors Fees. If you decide to leave POA with a solicitor their fee is between 120€ and 150€ on average.
There were 3 purchase price level structures as per below, however in 2021 it was amended to a flat rate of 7% across the board. (It may revert back to these figures in the future & we will update as and when should this happen)
1) Up to 400,000€ your transfer tax is 8%.
2) From 400,001€ to 700,000€ it is 9%
3) From 700,001 and above is 10%
So for example if your property price is €100,000 it could cost €107,000 (or more) by the time you complete and take possession of the property.
This is an example below of puchase costs for one of our properties. All properties on our website have a full breakdown of costs on each property listing to help your search.
LET US DO THE WORK FOR YOU.... When you contact Spanish Property Choice and The Garners all you need to do is give us our full criteria and your overall budget! We will then source properties to match.
hope this information is of help to you in your search so that right from the start you clearly understand how much a property will cost you, what price bracket can you look at.
The information above is provided to Spanish Property Choice by a 3rd party source.
It is important for you to clarify the purchase costs prior to any offers on a property. Spanish Property Choice cannot be held responsible for any matter related to this information provided on here as general advice!
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