How much tax on resales?

Does anyone know whether the same tax rates apply when buying a resale, as when buying new? New is 7% IVA plus 1% for some kind of new property tax. Would I pay this if I bought a resale property?

Liz

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Hi Liz, Yes 7% PPT Property purchase tax as opposed to IVA for new build. You may need to pay the plus valia tax also which is usually a small amount of tax to transfer the land element of your purchase. It is usually a few hundred euro´s depending on the increase in the land value since last transfer of ownership. Some times the vendor pays but it is up to your lawyer to come to an arrangement with the vendor. All is usually written into the Contracto de Compra Venta (purchase contract) You will not need to pay the 1% new build tax on a resale.

This message was last edited by Gillespie on 4/3/2007.

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In my experience the vendor always pays the Plus Valia. I think it's quite rare for the buyer to pay it - at least, I never heard of a case. What's your experience, Gillespie? If the seller has owned the property for a long time, it could be quite a large amount. I just bought a property that the seller had owned for about 20 years - PV was estimated by their lawyer at around €2,200, and this was just a studio apartment, so I would suggest that you INSIST that the contract states clearly that PV is for the vendor's account. It's essentially a Capital Gains tax, so why should the buyer pay it anyway - what gain has the buyer made, apart from getting a new property of course? Besides, 7% transfer tax is quite enough thank you!

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Sorry Gillespie I have to agree with Rob (groan) accepted liability is the vendor unless otherwise agreed - of course the Spanish will try and disclaim the liability but it is for the vendor unless otherwise specifically agreed - at least here on CDS - I know there are regional differences but thinkk this is covered ny national property law not regional

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Why the (groan)? Everyone already probably suspects us as being one person, since we almost always agree on everything. Except perhaps what colour frock to wear on Saturday night....It's a bit of a Fibby/JeanSis thing.....or a Michael/LaToya Jackson thing. Except unlike them, we HAVE been seen in public together!

Just as a point of interest, the Plus Valia tax is calculated on the difference in the Valor Catastral (bit like rateable value in UK and which can be found on your IBI  bill), from when the property was bought to when it is sold. Occasionally councils have a merry old time re-assessing the valor catastral of properties in their jurisdiction, presumably to inflate the coffers from plus valia taxes. This is also used as an effective means to get people to declare more of the sale price, since there is usually an unofficial calculation based on the valor catastral to work out how much should be declared on the escritura - for example, 2.5 times the valor catastral. Of course, I (we both) recommend declaring 100% of the sale price.

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SHALL WE BE ALTER AND EGO OR SCHIZO AND FRENIC - CANT HAVE THEM THINKING WE ARE LIKE FIBBY AND JEANSIS - THEY ARE A COUPLE OF GIRLIES - WE ARE BIG STRONG MEN - JUST LIKE IN THE LUMBERJACK SONG (OR ARE YOU TOO YOUNG - YOU COULD BE MY TOYBOY) - SHALL I SEE YOU MOONWALKING IN BOYS TOWN ON SATURDAY THEN? OR JUST MOONING IF YOU LIKE??

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I do wish that Fibby would stop claiming she's me !  (It's the other way round, I'm her. ) And, between us, we are big & strong too.  

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Rob & smiley - you are correct to state it is the vendors responsibility to pay the plus valia tax.  But I had several experiences in the early days where the Spanish owners buggered off without paying it. My clients would then get the bill later as it would be a debt againt the property.

I solved the problem  by having the buyers lawyer retain the cash from the black money in front of the vendor and make the payment on the vendors behalf just to be sure it was done.  It works great and never had a problem since.

I have found that in more recent times because the buyer makes a low offer, then the Spanish vendor will accept it if the buyer pays the plus valia, seems OK to me if the buyers has got 20k or more off the price, I usually advise the buyer to accept this if they have done OK on price and of course having got an estimate as to the amount through the buyers lawyer.

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Dear all,

Thank you for your informative replies.

 I am now a bit depressed as I had hoped that the tax on resales would be less than new. Thanks also for the information on the land value thing- that was a new one to me.

Now i'm looking for something up to 150,000 euros, not 175,000 due to the taxes and wotnot. If you hear of any bargains, please let me know.

Cheers,

Liz  :-)

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Where are you looking to buy.  I am not an agent or anything to do with agents just that I have a friend with a few problems that now needs to sell and it is a bargain!

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Liz, the usual rule of thumb when buying here is to allow around 10% of the purchase price to cover transfer tax and other fees (legal, notary, land registry etc.) - a little more if you need a mortgage. So a property for €160K should still fit within your original budget of €175K more or less.

Have a good rumage around all the old threads on this forum - you'll find most of your questions answered somewhere, but if not, don't be afraid to ask - we're all here to help each other

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Liz the taxes are slightly less on resale as Gillespie I think metioned - there is no Title Deed Stamp Duty (1% of pp) on resaleso on a purchase of 150k you will save 1500€ - not to be sniffed at - also if buying on mortgage the loan can be based on value not purchase price which can sometimes be very different - if you find a good deal you might be surprised what you can do

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