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View Full Version : Tax What taxes must be paid upon buying/selling property in Tenerife?



Inga
18-03-2014, 17:23
Hi, what taxes must be paid upon buying/selling property. How much? Would there be a difference if bought and sold in ..a year? I talking about not a permanent resident.
thanks in advance

Jabba43
18-03-2014, 20:19
6.5 % everytime it is sold, plus notary and if needed lawyer fees. Add another 1% if you need a mortgage.

bonitatime
19-03-2014, 22:54
Buying i would calculate 12% and presume it would be a little less if you have a mortgage
Selling there is money withheld if you are non resident

Inga
22-03-2014, 15:52
Hi. You're mean money withheld for 6.5 % of taxes when sold? How that withholding done?

delderek
22-03-2014, 17:23
Hi. You're mean money withheld for 6.5 % of taxes when sold? How that withholding done?

Tax is actually 3% of the value when selling if you are non resident. Deducted and given to the Notary at time of sale. (you can claim back any excess if your actual capital gain is less than this)

10% should cover all buying costs.

Inga
23-03-2014, 12:04
Hi, thanks, now little confusing, if non rezident only 3% when sold or when bought also? for real estate tax and all costs like 10 %, so what costs is in rest 7%? Where to find official info in english as here I get mixed info. Would notary provide me with such info? Where else can I go for it. I tied to ask real estate agent, but she didnt know.. she mention same accountant office in las americas, anybody knows? Thanks again

CIM
23-03-2014, 19:23
[QUOTE=Inga;361724I tied to ask real estate agent, but she didnt know...[/QUOTE]

Well I think you should seriously consider finding another real estate agent!!!
To buy and sell a property as a non-resident with no mortgages involved will cost approximately 8% - 9% when buying and 3% (tax) when selling. Also factor in that if you are using an agent to sell, then they will charge a commission (usually of 5% of the sales price) so it could be a total of 8% when you sell.
So if you are looking at buying a property to sell on then you will need a margin of at least 17% in order to not lose any of your money - example:

Purchase price: 100,000€
Taxes and fees: 8,500€ (6.5% taxes, notary, registry, legal and bank fees.)
Total: 108,500€

Sales price: 117,000€
Retention of 3%: 3,510€
Commission at 5%: 5,850€
Back to you: 108,000€

So you need to be able to sell at around 17% above the purchase in order to get back what you put in.

delderek
23-03-2014, 19:31
When you buy the cost will be about 10% of the value. which will include tax and several different costs, but 10% will be the approx total.

When you sell (as a non resident) you can choose to pay 3% of the total value, which if you have made a large capital gain is the best option. If you have not made any profit, you can claim it back, but it is not easy and takes a long time.

I don't think it can be made simpler than that.

And why would you find official translation in English. You are buying in Spain.

doreen
24-03-2014, 09:29
When you buy the cost will be about 10% of the value. which will include tax and several different costs, but 10% will be the approx total.

When you sell (as a non resident) you can choose to pay 3% of the total value, which if you have made a large capital gain is the best option. If you have not made any profit, you can claim it back, but it is not easy and takes a long time.

I don't think it can be made simpler than that.

And why would you find official translation in English. You are buying in Spain.

Not much choice involved - you cannot sign at the Notary without 3% being withheld if you are a non resident. Perhaps you mean, chose not to submit a further return of Capital Gains if the gain is more than that.

As to buying and selling in the same year - as a resident, I believe a gain is deemed as Income, so liable to higher tax rate - not sure if the same applies to a non-resident.

Tenerifelass
24-03-2014, 15:13
CIM; thanks for your informative post. Can you please advise how much (what percentage of the total price of the property) is the "norm" for an estate agent to charge (commission etc) for buying a property from viewing to finalisation of the deeds at the notary (I am not talking about notary fees and tax etc, only the normal commission estate agents get from the buyer while buying and the seller while selling), and how much commission on aqverage do they charge for selling through an estate agent? Thanks and kind regards
Diana


Well I think you should seriously consider finding another real estate agent!!!
To buy and sell a property as a non-resident with no mortgages involved will cost approximately 8% - 9% when buying and 3% (tax) when selling. Also factor in that if you are using an agent to sell, then they will charge a commission (usually of 5% of the sales price) so it could be a total of 8% when you sell.
So if you are looking at buying a property to sell on then you will need a margin of at least 17% in order to not lose any of your money - example:

Purchase price: 100,000€
Taxes and fees: 8,500€ (6.5% taxes, notary, registry, legal and bank fees.)
Total: 108,500€

Sales price: 117,000€
Retention of 3%: 3,510€
Commission at 5%: 5,850€
Back to you: 108,000€

So you need to be able to sell at around 17% above the purchase in order to get back what you put in.

CIM
24-03-2014, 15:37
In general, when a property is sold, the seller of the property pays the agent the fees agreed when the property was first marketed. The standard amount is 5% of the final price plus IGIC (so it works out to be 5.35%.)
The agent does not receive anything from the buyer on a standard resale though.

I have had and seen several cases though where I have been given a property and asked to sell them but there has been no way for a seller to pay anything so the invoice is made out to the buyer (the price plus invoice is the price being advertised.)
I have 2 buyers now waiting for something I have and they are both paying fees as the seller cannot pay anything from the proceeds of the sale (all going to the bank and legals....) So it does happen but itīs unusual.

On the other hand, Russian agents seem to be charging 5% to the seller and then whatever they can get away with in cash to the buyer (often far in excess of 5%.)

Inga
24-03-2014, 18:52
Thanks, super answer. But I also wonder, might be witheld more if I sell in one year, being none resident?.