Real estate taxation in Spain: useful tips to make sure you're not wrong

 

Real estate taxation in Spain: useful tips to make sure you're not wrong


Spain continues to experience a period of strong growth and commercial expansion, which began in 2014, causing great interest in potential investors.
Also at the real estate level has been recorded this situation of extreme well-being, which seems impossible to stop. More and more people wanting to buy a property in Spain, because the entire economy marks important and positive elements:
Attractive prices, political stability, rising gross domestic product, highly developed infrastructure, rising domestic demand, lowering the unemployment rate.
But you need to understand how to move to avoid falling into error (at the level of jurisdiction) And know the benefits that you can enjoy.
First, in Spanish law are provided for different types of rights on real estate.
The rights on the ground and those on the buildings on the ground are not severable.
This is an exception: the hereditary construction right, which provides for its separation. The beneficiary of this right can build on or under the land of the owner of the building in exchange for a periodic rent. The contract is temporary: once the deadline has expired, ownership of the building passes to the owner of the building. The contract duration has a maximum limit of 99 years and the validity is given by the registration of the deed and entry in the Spanish real estate register.
These rights can be enjoyed by individuals and entities, both private and administrative. Since 1992, the regulations governing foreign investments have liberalized all investments in Spain.
For greater protection and security, investment rules are always linked to the place of origin of the investment, rather than to nationality. EU citizens are an exception to this rule.
Let us now move on to the purchase and sale of immovable property.

                                                          
Preliminary agreements are often used for real estate transactions.
Sales contracts are evaluated as consensual contracts, which means that they become concrete and with
effects of the law when the parties have reached a mutual agreement on the subject matter and price. Article 1278 of the Civil Code stresses that sales contracts are legitimately suitable regardless of form (written form is not mandatory). But, nevertheless, every transaction or real estate contract is stipulated in this form, in order to avoid future problems. To register a change in
property in the Register of real estate, the contract of sale must be evidenced in an act of public notary.
And taxation?
A transfer contract normally gives rise to subsequent tax derivations from the seller's side:
- public value added tax, levied on the increase in the value of the land continuing the ownership of the property through concrete criteria and is calculated on the basis of the value of the cadastral graph,
- Capital gains tax. If the seller is not resident in Spain, the buyer must block 3% of the purchase price and deposit it immediately with the Spanish tax authorities;
- income tax or corporation tax, as the case may be, on probable gains from the sale, both for residents and non-residents.

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