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Non-residents pay 35% on capital gains from the sale of property and as
a resident you would also be liable for tax on top of this. There are
some tax breaks, which can lesser the burden, such as reinvesting in
another property as your principal residence, which would bring relief
on the sum invested.
The remainder of the profit will taxed as a capital gain and as part of your income but the maximum percentage cannot exceed 20%. A non-resident vendor is required to lodge 5% of the purchase price with the Hacienda (Agencia Estatal de Administración Tributaria, but still called "Hacienda") to ensure that he pays his capital gains tax.
There is also a tax (patrimonial) on both residents and non-residents of 0.2% of the property (after deducting liabilities).
It is recommended to consult a tax advisor such as an 'asesor fiscal' or a 'gestor' which will cost from 60€ upwards depending on your case.
Under Spanish tax laws both residents and non-residents are liable to
be taxed on inheritance and gift tax (Impuesto Sobre Sucesiones y
Donaciones) on any money bequeathed.
Regulations regarding foreign wills in Spain can become problematic for
heirs therefore it is easier to make a Spanish will for your assets in
the UK . Otherwise you would be tied to the Spanish law of compulsory
heirs. Spanish inheritance will be liable on your estate. Inheritance
tax is due after the first 16,000€ for each inheritor and there are
exemptions in place for minors and immediate family under 21 years of
age.
If you have officially resided in Spain for three years or more and leave your property to your spouse or child (who is also resident, there is a possible 95% reduction in the inheritance tax burden.
When purchasing a property in Spain you can either arrange UK mortgage
through a bank or building society, or take out a Spanish mortgage
(fixed or variable rate). Most Spanish banks are happy to offer
mortgages of up to 80% to residents and a lower rate of 60%-70% to
non-residents. You will need to supply proof of your monthly income and
outgoings, such as loan repayments, existing mortgage payments etc. The
documentation required differs from each bank and there are various
mortgage brokers with offices in Spain who specialise in finding the
most suitable offer.
Further Sources of Information
Spanish Ministry of the Treasury booklet, called Taxation Regulations for Foreigners. (Publication F-9). Please Note, Any information provided here is for Guidance only and should not be used as a Substitute for professional Legal and Financial advice.
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