Property in Spain: Expenses

It is customary on the Costa del Sol that the seller of the property pays the real estate agent’s commission, which may vary depending on the agency and the price of the property.

Unless agreed otherwise with the buyer, notary fees are for the account of the seller, except for the cost of the first copy which is paid by the purchaser. Notary fees are fixed by the law on the basis of a scale. Another tax to be paid by the seller, although it may be subject of negotiation with the purchaser, is “plusvalia”, a municipal tax on the increase in value of the land alone. Note that if the seller does not pay this “plusvalia” tax, it will fall on the property.

A non-resident seller is subject to a 3% tax withholding on account of any possible capital gains. Capital gains tax is 18% of the profit of the sale. This profit is the difference between the selling price and the purchase price plus all purchasing costs and costs on improvements of the property. If the seller’s liability is less than the 3% withheld at the time of the sale, the seller can claim it back from the tax office. If higher, the seller will have to pay the difference to the tax office.

There is one exception regarding the 3% retention: when the property has been owned by the vendor, at the date of 31st of December 1996, for more than 10 years and when the vendor is an individual (not a non-resident company). Also there is no retention when the vendor is subject to the normal income tax for residents or to companies’ tax.

All property taxes such as I.B.I, garbage collection tax, community fees if any as well as normal running costs such as electricity, telephone, water, etc. should be paid by the vendor up to date when the property is transferred to the new owner. If these cannot be calculated exactly on that date, it is customary that the buyer or his/her legal representative requires that an amount of money is left in deposit to guarantee these payments.

Please do not hesitate to call DM Properties if you require further information.

Tuesday, March 13th, 2007 in DM News and Articles