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Calle Chile, 4

28290 Las Rozas de Madrid

910 841 767 | 644 434 347

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Taxation on real estate transactions by Foreigners

Taxation on real estate transactions by Foreigners

InmoSquare Real Estate settle down in Las Rozas of Madrid update the importancy of knowing about the Taxation on real state transactions by foreingners.

In relation to sales taxes: when buying a property, the taxation is the same, regardless of whether the buyer is resident or non-resident.

  • Depending on the case, you will have to pay VAT if it is a new property (10% for all buildings except housing 8%) or if the second transmission is the ITP (8%).
  • In any case, you must satisfy the IAJD together with VAT. (1%) if purchased with financing

As a natural person: Non-residents owning or owning real estate in Spain are subject to the Non-Resident Income Tax that accrues on December 31 of each year.

  1. It is estimated income if the property is not leased and is built. It is not a real income that the non-resident has obtained, but is presumed to be called income imputation. For these purposes, it is determined by computing as income 1.1 per cent of the cadastral value of the property (2 per 100, if the cadastral value had not been revised or modified with effect from January 1, 1994).
  2. It is taxed on that amount, without deducting any type of expense.
  3. Applying the type of assessment is 24%.

Example: Non-resident who has remained as owner of a property throughout the year 2011 whose value is 100,000 euros: 100,000 x 1.1% x 24% = 264 euros per year to enter. In the case of rental of the property, the income obtained will be taxed without deduction of any expenses for the general rate of IRNR, that is, 24%.

To buy in Spain:

  • Get a N.I.E. “Alien Identification Number” (NIE). It is imperative to buy a house in Spain. Although you can wait until you have found a house to request it, we recommend that you request it as soon as possible.
  • Opening a local bank account will require a bank account in Spain during and after the purchase process. The income to that account of non-residents must be perfectly justified its origin through models that are completed in the country of origin of the funds.
  • Accredit means of payment in writing: all payments made in the property must be perfectly credited and must be accompanied by a bank certification of the provenance of the money.