Investing in property on the Costa del Sol combines lifestyle benefits with financial opportunities. However, understanding the taxes tied to property ownership is vital to maximise returns and avoid unexpected costs. Spain’s property tax landscape includes one-time purchase taxes, annual levies, and specific obligations for residents and non-residents. Navigating these requirements can be complex, but with expert guidance, you can ensure compliance and optimise your investment.
At Kore Estates, we are committed to supporting you at every step of your property journey. As part of this service, we can recommend from our network of highly knowledgeable tax specialists and advisors who can offer tailored guidance based on your unique circumstances.
Purchase Taxes and Costs to Buy a Property in Marbella, Spain
1. Property Transfer Tax (ITP)
When purchasing a resale property in Andalucía, buyers are required to pay the Property Transfer Tax (ITP). This tax is set at a flat rate of 7% of the purchase price, making it a substantial part of the overall buying costs. ITP must be paid by the buyer within 30 days of signing the public deed at the notary, ensuring that the property transfer is legally recognised. It’s essential to include this tax in your initial budget to avoid any financial surprises during the purchasing process. Proper planning for this expense can help streamline the transaction and ensure a smooth property acquisition.
2. Value-Added Tax (IVA) and Stamp Duty
For new properties purchased directly from developers in Andalucía, the Property Transfer Tax (ITP) does not apply. Instead, buyers are required to pay Value-Added Tax (IVA) and Stamp Duty. The IVA rate is set at 10% for residential properties, while commercial properties and plots of land are taxed at a higher rate of 21%. In addition to IVA, Stamp Duty (Actos Jurídicos Documentados) is charged at 1.2% of the purchase price. Given the varying tax obligations depending on the type of property, consulting a knowledgeable tax advisor is highly recommended. This ensures you understand which taxes apply to your purchase and can plan your budget accordingly.
3. Other Costs
- Notary Fees: €800–€1,200, depending on the complexity of the transaction.
- Land Registry Fees: €400–€1,000, depending on the property value.
- Legal Fees: 1%–1.5% of the purchase price for essential legal due diligence.
- Mortgage Costs (if applicable): Include valuation fees (€300–€700), mortgage arrangement fees (~1% of the mortgage amount), and Stamp Duty on the mortgage liability (1.2%).
Property Taxes for Owners in Marbella, Spain
1. Annual Property Tax (IBI)
The Annual Property Tax, known as Impuesto sobre Bienes Inmuebles (IBI), is a municipal tax charged annually to property owners. It is designed to fund essential local services such as infrastructure maintenance, waste collection, and public amenities. The tax rate typically falls between 0.4% and 1.1% of the property’s cadastral value, a government-assessed figure that is usually lower than the market value. Property owners receive notifications from the local tax office each year, detailing the amount due and the payment deadline, ensuring they stay compliant with their obligations.
2. Rubbish Collection Fees
Rubbish collection fees on the Costa del Sol typically range between €200 and €300 annually, depending on the municipality where the property is located. These fees are allocated to fund essential waste management services, ensuring the proper disposal and recycling of household waste.
3. Wealth Tax
Wealth Tax in Spain applies to both residents and non-residents who hold assets within the country, including properties. The tax rates range from 0.2% to 2.5%, with generous exemptions available. Non-residents are entitled to a tax-free allowance of up to €700,000, while residents benefit from an additional €300,000 exemption for their primary residence.
However, in Andalucía, residents currently enjoy a 100% Wealth Tax exemption, effectively eliminating this obligation. Non-residents, on the other hand, may still be required to file and pay Wealth Tax based on their Spanish assets, making it important to seek advice from a qualified tax professional.
Taxes for Non-Residents and Fiscal Residents in Marbella
1. Non-Resident Income Tax
Applicability:
- For rented properties: Taxed on actual rental income.
- For non-rented properties: Taxed on imputed rental income based on 1.1%–2% of the cadastral value.
Rates:
- 19% for EU/EEA residents.
- 24% for non-EU residents.
2. Capital Gains Tax (CGT)
Rates:
- 19% for gains up to €6,000.
- 21% for gains from €6,001 to €50,000.
- 23% for gains above €50,000.
Withholding Tax: Non-residents face a 3% withholding tax, which is reconciled with the final CGT liability.
3. Wealth Tax
Thresholds and Rates: Non-residents are taxed on assets in Spain exceeding €700,000, with rates ranging from 0.2% to 2.5%.
Seller’s Taxes and Expenses to Sell a Property in Marbella
1. Capital Gains Tax
This tax is calculated based on the profit made from selling a property. However, there are exemptions available under specific circumstances, such as for residents over the age of 65 who sell their primary residence. These exemptions aim to ease the financial burden on qualifying individuals, making it a crucial consideration for those planning to sell their homes.
2. Plusvalía Municipal (Land Value Increase Tax)
The Plusvalía Municipal is a local tax levied on the increase in the land’s value from when it was acquired to the time of sale. The calculation is determined using the property’s cadastral value, along with the length of time the property has been held by the owner. This tax is managed by the municipality and can vary depending on the location and regulations in place.
3. Agent Fees
Real estate agent fees typically range between 5% and 6% of the property’s final sale price, excluding VAT. These fees are usually agreed upon before listing the property and cover the services provided by the agent, including marketing, viewings, and negotiation support, ensuring a smoother sales process for the seller.
Taxes and Costs for Owners When Renting a Property
1. Income Tax
Non-Residents:
- 19% for EU/EEA residents, with allowable deductions.
- 24% for non-EU residents, taxed on gross income.
Residents: Taxed on rental profits at progressive rates.
2. Additional Costs
Community fees, utilities, and maintenance costs may need to be covered by the owner unless otherwise agreed with the tenant.
Practical Steps to Manage Your Tax Obligations
1. Estimate Your Tax Obligations Early
Understanding your financial commitments early on is essential for smooth property ownership. Our recommended advisors can help calculate taxes like ITP, IVA, and annual IBI for you, ensuring your budget reflects the full scope of costs.
2. Understand Exemptions and Deductions
Spain’s tax system includes numerous exemptions and allowances, particularly for EU/EEA residents. From rental income deductions to Wealth Tax allowances, our network of experts will ensure you take advantage of all available benefits.
3. Stay Compliant with Filing Requirements
Non-residents are required to file regular tax returns, including quarterly income tax declarations. Our trusted advisors provide guidance to ensure timely and accurate filings, keeping you compliant with Spanish regulations.
4. Plan for Long-Term Implications
Property investments often carry long-term tax implications, including CGT and Wealth Tax. Our network of tax professionals can assist with ownership structuring, succession planning, and other strategies to optimise your tax position.
Take Control of Your Property Tax Journey
Navigating property taxes on the Costa del Sol doesn’t have to be overwhelming. With Kore Estates, you gain access to a network of knowledgeable tax specialists who will guide you every step of the way. From purchase taxes to long-term planning, our partners ensure you understand and fulfil your obligations while maximising your investment’s potential.
Contact Kore Estates today to learn more about how we can connect you with the right experts to simplify your property tax journey and make the most of your Costa del Sol investment.