Hidden Purchase Tax and Help When Buying a Property

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Posted and filed under Legal Issues in Spain, Property in Spain, Property Purchase/Sale Service, Taxes in Spain.

We often see posts on social media by people who have been charged a further tax after buying a property that they were not expecting.

There is no reason to be wary of buying a property in Spain or to think that you will get hit with extra taxes and charges, or that Spain is corrupt.

If you use someone professional to help you in your purchase, everything should go smoothly. You must make sure you are fully informed of all aspects of investing in property in Spain, that is what makes the difference.

We are starting to realise that we seem to be one of the exceptions being a company that fully informs our clients regarding everything, rather than the rule. 

You need to be informed that there is the possibility of a hidden tax if you do not use the right value for the property, that in Spain the buyer can inherit debts on a house if these are not cleared before purchase and other matters such as that there is a non-resident tax.

The Tax office in Spain takes a different value for a property than the market value. Every property has a value assigned to it and when a property changes hands through the Notary the buyer should be paying the purchase tax (10% in the Alicante region) on this tax value, not on market value, to avoid a hidden additional tax.

This surprises many people who do not use someone experienced in aspects of property purchasing in Spain and can be a great shock when buyers receive a demand six months or a year after buying. But it does not need to happen. This is another reason why people should use Spanish Solutions when buying as we fully explain to our customers why this is happening now (it is only in recent years and now we are fully aware of it), and what value should be used for the purchase.

The first thing someone should do when interested in buying a property is to seek experienced expert help, before putting a deposit down, to go through everything, check the contract and explain the costs likely to be incurred.

The tax value of the property should be checked and the client advised of any potential possible additional tax (this is called “Complementaría tax in Spanish) and what it would be best to do about it.

Sometimes it is possible to appeal this tax. In case you are wondering, tax values are determined by taking the cadastral value of a property (which you will find on the IBI bill or SUMA in this area and multiply it by a coefficient figure, which is published each year in the region and municipality). You are best to take expert advice to look at these figures.

If we can help with a property purchase or a query regarding this purchase tax, please contact us enquiries@spanishsolutions.net

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