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Spanish taxes that have caught you by surprise

Spanish taxes have caught many of you by surprise… We started in 2016 with a surprise: the Community of Madrid and Andalusia wanted to recovered the ITP from the rent, a Spanish tax that had never been charged despite having been contemplated in the law since 1993. We later learned that the Treasury would begin to demand payment of the tax (AJD) whenever any of the conditions of the mortgage were changed and that Catalonia would punish with a new tribute to all those entities that maintained unoccupied floors for more than two years in areas of high demand.

In addition, the different Spanish tax administrations of the autonomous communities began to send ‘supplemental assessments for checking of securities’ to all those who bought a flat at very low prices demanding the payment of an extra tax that they already paid at the time of purchase.

To finish the year, the Ministry of Finance announced a few days ago the revision of the cadastral value of real estate in 2,452 municipalities. The inhabitants of 1,895 localities will see how the value of their properties increases and how that variation will directly affect the receipt of the Tax on Real Estate (IBI), the municipal surplus value or the ITP. On the contrary, 557 people will pay less tax.

Rental ITP: what is and how much to pay

Since the beginning of the year, the main autonomous communities of Spain are searching with a magnifying glass all the taxpayers who have been renting in the last four years to check if they have paid the Patrimonial Transfer Tax (ITP).

This tax, which seemed destined to be forgotten due to its lack of application by the Spanish Tax Administration, has been in force since September 24, 1993, when the Consolidated Text of the Tax on Capital Transmissions and Documented Legal Acts was approved.

As explained, this tax must also be paid by tenants because the rent is also considered an onerous acquisition, such as the purchase. “The tenant acquires a right to use the house for a certain period in exchange for a price, so it is an onerous acquisition.

Luckily, the amount is not too high: for a contract with an income of 600 euros per month and a default of three years, the debt would be around 86 euros. If we apply to this amount a penalty of 25% the amount to be paid would rise to 107 euros and would shoot up to 150 euros in the event that the tax imposed a fine of 75%, very unlikely case. The payment of the tax can be made with stamped documents or with the model 600 of the Spanish Tax Agency within 30 business days after signing the contract.

You will pay AJD if you change the terms of the mortgage

Mortgage novation, as it is technically called a change in loan conditions (term, interest rate, amount, currency...), has been in recent years a very useful tool for those ‘mortgaged’ who have needed a refinance of their Debt or an adjustment of the conditions commensurate with their economic possibilities.

So far these changes did not involve the payment of new Spanish taxes. But a change in the criteria of the Spanish Tax Agency has caused that the payment of the Tax of Documented Legal Acts (AJD) is started when in novation there are changes in valuation values, amortization systems or extension of the grace period.

This is established by a binding consultation with the General Directorate of Taxes of 2014, which states that the amendment of the clauses of the mortgage will only be exempt from the payment of the AJD only when it affects the alteration of the agreed or current interest rate, or the alteration Of the term.

The ‘anti bargain’ Spanish taxes

Although the price of housing is recovering ground, the truth is that you can still find flats at very low prices. However, the autonomous haciendas are penalizing the purchase of a ‘bargain’, through the claim of a payment higher than the one originally paid from the transfer tax (ITP). The reason is that they value homes above the book value.

The Spanish tax administrations of the autonomous communities require the buyer or heir of a dwelling to pay an extra tax which they have already paid after the purchase or inheritance. It is what is called “complementary liquidation by check of values”. Moreover, it does not come alone, but accompanied by the corresponding interest for delay.

However, the good news is that you can avoid getting paid. Various lawyers ensures that in most cases these additional fees are being annulled by the Courts. To appeal these additional assessments, the taxpayer has a deadline of one month from the day following the notification to go to the Economic-Administrative Court.

Empty floors tax

As of March 1, the Generalitat has started enforcing new Spanish taxes on empty real estate. Financial entities and large homeowners who have kept floors empty for more than two years without justifiable causes. This tax is paid depending on the surface of the floors. The minimum fine is 10 euros for each m2, while the maximum is 30 euros.

The owners of up to 5,000 m2 of empty houses will have to pay 10 euros for each m2, which would imply a maximum of 50,000 euros. When the unoccupied area is between 5,000 and 20,000 m2, the cost will rise to 15 euros / m2 and thus to the most extreme case: 30 euros per m2 for those with more than 40,000 m2 unemployed.

This measure, which at the moment does not affect individuals, could be applied to a total of 8,300 homes, according to official estimates, which will allow the Generalitat to raise some 8 million euros.

The Cadatral value will be updated in 2017

The Ministry of Finance has decided to celebrate the arrival of the new year with a revision of the cadastral value of the real estate in 2,452 municipalities. Last Saturday, December 3, the Government published in the Official State Gazette (BOE) the coefficients with which the cadastral value can be updated in 2017. This means that the municipalities that requested this update can adjust these percentages and, thus, update The value of real estate to market.

This variation will directly affect the calculation of taxes as important as IBI, municipal capital or ITP and assumes that the 1,895 who will review these valuations upwards will pay more taxes, while in the 557 that will lower, the tax burden will be reduced. This will happen in localities that thoroughly reviewed it after 2004.

Property purchase & Spanish Taxes Advice

If you are interested in purchasing an exclusive villa in Marbella or a nice apartment in Estepona, please please do not hesitate to fill the form on Contact Us or give us a call on +34 952 811 010 Today ! Also in case you need some legal advice on Spanish property taxes, please let us know.

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