Being up-to-date in real estate taxation is essential for professionals in the sector: only then can they adequately advise their clients before, during and after a sale. For both sellers and buyers it is essential to know in detail what they will have to pay, beyond the amount of housing. And for this, you not only have to take into account notary fees, registration and professional fees, but also what taxes are applied to this operation and how much they amount.
The figures are not unique, because there are important differences between the different autonomous communities, and also because various bonuses must be taken into account for specific cases, especially depending on the age or the existence of a disability of the people involved in the operation. "We must be able to offer accurate information as experts, so that our clients know what will be the real amount that they will have after the sale of their home or what they need to be able to formalize the purchase ", affirms the lawyer Pepe Piñar.
Information of maximum interest
Knowing what taxes are going to be applied and how much they are going to amount can be one of the keys that help to close operations satisfactorily for all parties. "In some cases, an apparently lower offer than the owner initially wants, once the tax burden has been calculated, it can be just as interesting ", explains Piñar.
That is to say, than a reduction in the price, with its corresponding reduction in taxes, sometimes it can be equal or more beneficial. And this information, duly explained and verified, can do that the sale is made faster.
Taxes for buyers
Both buyers and sellers have to bear a series of taxes after a real estate transaction.
In the case of buyers, the taxes that can affect them are three: the property transfer tax (E.T.C), The tax over the value added (VAT) and the tax on documented legal acts. But it will never be all of them: “The ITP and the AJD are incompatible in the same operation. A sale is subject only to ITP, or to VAT and AJD ", explains Piñar.
- The property transfer tax (E.T.C)
It is a state tax ceded to the autonomous communities, so the tax rate changes according to the territory that manages it. It applies to real estate purchase and sale operations when it is not the first transfer.
It is paid by the buyer within 30 days following the signing of the sale and purchase transaction and the percentage varies between 6% and the 10% depending on the autonomous community and the price of the property.
In some territories there are bonuses for habitual residence of large families, for buyers under 35 years and properties up to 130.000 euros or for people with disabilities as long as the property does not exceed 180.000 euros.
- Value Added Tax (VAT)
It is applied in the first transfer of a property. That is to say, usually, in new construction sales. The general rate for homes is 10%, and it is reduced to 4% in the case of officially protected housing or public promotion. For locals, garages or plots that are not attached to the house, the VAT will be 21%.
VAT can also be applied instead of ITP on subsequent sales if the buying party is a company. "They may be interested in this option because they can recover that VAT, while property transfer tax does not allow it”, indicates Piñar. For this, the buyer must be a VAT taxable person (companies registered and billing), the purchase must be related to business or professional activity and must be entitled to a full VAT deduction.
- Tax on documented legal acts (AJD)
It is also a tax assigned to the autonomous communities, so the percentage varies on each site. It is generated by the fact of going to a notary with a document that includes an economic valuation. "It is paid to carry out an economically evaluable notarial operation", specifies the expert. It is paid if the operation has VAT, but not in the case where the ITP is applied.
He percentage ranges from 0,5% and the 1,5%, according to the autonomous communities, but there are lower percentages if certain age or disability requirements of the buyers are met.
Sellers must bear the municipal capital gains tax, of capital increase in its income tax return or corporate tax (in the case of companies). AND, sometimes, also of the tax of documented legal acts.
- Documented legal acts for sellers
This tax is applied to the selling party if there is a need for documentary adequacy of the property before sale. That is to say, yes before being able to perform the operation, some changes must be made to the original deeds, like segregation, aggregation or grouping of real estate, by declaration of new construction or by the horizontal division of a building. It oscillates between 0,5% and the 1,5%, but it should only be paid in that type of case.
- Municipal capital gain
This is the tax on the increase in the value of urban nature lands, It depends on each municipality and only applies to the sale of urban real estate.
Capital gains it is calculated with the difference in value between the time of purchase and sale, with a maximum of twenty years, and different coefficients are applied for each period of time, in five-year installments. How the tax is fixed by each city council, there are great differences between some municipalities and others, but it can never go beyond 30%. Also, there are bonuses up to 95%. It will be necessary, so, consult the regulations that apply in the specific municipality.
If it is sold the same year of purchase, no increase in the value of urban land is generated, so this tax would not be applied. Also, if it is going to sell for less than what a property was bought, the notary's office must be requested to record in writing the request for exemption from this tax, because in reality it will be a handicap and not a capital gain. "There are already many municipalities that understand that it is not appropriate to settle this tax in these cases of capital loss", indicates Piñar.
- Capital gain on personal income tax or corporation tax
The selling part must include the capital gain that the sale of the property has entailed in your annual personal income tax return (IRPF).
When it comes to a company, the profit will be computed as benefits of the company and will be subject to corporation tax.