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This presentation has been updated and is valid for 2019*.

Property Sales Tax Payable in Murcia. This presentation has been updated and is valid for 2019*. *Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the information contained in this presentation. Please consult a lawyer before acting. 2.

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This presentation has been updated and is valid for 2019*.

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  1. Property Sales Tax Payable in Murcia This presentation has been updated and is valid for 2019*. *Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the information contained in this presentation. Please consult a lawyer before acting. 2

  2. Property Sales Tax Payable in Murcia All new properties in Spain are subject to IVA (equivalent to VAT in the UK & Ireland) whereas secondhand properties are subject to ITP (Impuesto de TransmisionesPatrimoniales). IVA is set by the State government and ITP is set by the regional government.

  3. Property Sales Tax on New Build Properties The purchase of new build properties in Spain attracts the medium rate of IVA which is currently 10% of the value of the property.

  4. Property Sales Tax on Second-hand Properties The standard rate of tax payable in Murcia on the transfer of second-hand property (ITP Tax) is 8% of the value of the property – Article 5 Legislative Decree 1/2010. 5

  5. Incentives for Home Purchase by Young People Property purchases by young people under the age of 35 shall attract a lower rate of 3% in the following circumstances: • The property must form the habitual residence of the purchaser. The term 'habitual residence' is as per the legal definition in income tax legislation. 6

  6. Incentives for Home Purchase by Young People • The value of the property must not exceed €150,000 • The total income of the purchaser (less personal and family deductions) must not exceed €26,620 • The property value cannot exceed €150,000 7

  7. Incentives for legally classified 'large families' A special lower rate of 3% applies to property transfers in which the purchasers are legally classified as pertaining to a 'large family' where the following criteria are met: 8

  8. Incentives for legally classified 'large families' • The property shall form the main, habitual home of the family • The fact that the property is to be used as the family home should be expressed in the deeds of purchase • The value of the home may not exceed €300,000 9

  9. Incentives for legally classified 'large families' • The total income of the persons who will live in the property (less individual and family deductions) shall not exceed €44,000 plus €6,000 additionally for each child over the statutory minimum number for classification as a 'large family' 10

  10. Lower rate of 4% for Public Housing • A lower rate of 4% stamp duty is payable on the purchase of any property that is classified as 'social housing'. 11

  11. Lower rate of 3% for Disabled Purchasers • A special lower rate of 3% applies to property transfers in which the purchasers are registered disabled as follows: • The disability must be > 65% as legally defined • The property must be purchased as the main family home 12

  12. Lower rate of 3% for Disabled Purchasers • The total income of the purchaser (less personal and family deductions) must not exceed €40,000 • The property value cannot exceed €150,000 13

  13. AJD Tax on Property A tax known as ‘Actos JurídicosDocumentados’ (Documented Legal Operations Tax) is also payable on property transactions. There are two types – a fixed rate and a variable rate (variable in that it is a tax set by regional parliament and so varies according to region).

  14. AJD Tax in Murcia The fixed rate is relatively minor, being fixed at a set amount per document needed to set-up the transfer: for example, 0.30€ per page. On the other hand, the variable rate is set as a percentage of the appropriate value – in Murcia this is set at 1.5%.

  15. AJD Tax in Murcia– New Build Properties If buying a new-build property in Murcia, in addition to the VAT paid (@10%) the purchase must pay the fixed rate as well as the variable rate (@1.5%).

  16. AJD Tax in Murcia– Resale Properties If buying a resale property in Murcia, in addition to the ITP paid (@8-10%) the purchaser must pay only the fixed rate of AJD.

  17. AJD Tax on Mortgages The variable rate of AJD tax is also payable on any mortgage that is created in order to finance the purchase of either a new build or secondhand property.

  18. AJD Tax on Mortgages • As a result of a recent change to the relevant legislation, the AJD tax on a mortgage is payable by the bank and not the borrower. • (It remains to be seen, but it is likely the banks will in future seek to recoup these costs by increasing their mortgage arrangement fees).

  19. AJD Specially Reduced Rates: Large Families The AJD Tax rate is reduced to 0.1% for legally defined ‘large families’ in the following circumstances: • Where the property acquired is to be the principal private residence of the purchaser and this is expressed formally in the deed of purchase

  20. AJD Specially Reduced Rates: Large Families • The income of the purchaser is below €44,000 per annum with an increase of €6000 permitted for each child over the number of children considered to constitute a ‘large family’ • The value of the property may not exceed €300,000

  21. AJD Specially Reduced Rates: Young People The AJD Tax rate is reduced to 0.1% where the property is purchased as part of the ‘Young Persons Home Plan in Murcia’ and where: • The purchaser is under the age of 35 • The purchaser’s income is below €26,620 per annum • The property is valued at no more than €150,000

  22. AJD Specially Reduced Rates: Young People The AJD Tax rate is reduced to 0.1% where the property is purchased as part of the ‘Young Persons Home Plan in Murcia’ and where: • The purchaser is under the age of 35 • The purchaser’s income is below €26,620 per annum • The property is valued at no more than €150,000

  23. AJD Specially Reduced Rates: Disabled The AJD Tax rate is reduced to 0.1% where the purchaser has a grade of disability > 65% as legally defined and where: • Where the property acquired is to be the principal private residence of the purchaser

  24. AJD Specially Reduced Rates: Disabled • The purchaser’s income is below €40,000 per annum • The property is valued at no more than €150,000

  25. For more information or assistance with legal or tax matters from our network of local English-speaking Property lawyers in Murcia 26

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