According to a recent study made by IESE Business School, the real estate sector is gaining more weight as an investment alternative; proof of this is the data for 2016, year in which there was an investment of 8.757 million euros in the non-residential sector, being the second best year of the decade.The report also reveals that investment interest is mostly orientated to offices in Madrid and Barcelona (53.5%), followed by logistics assets and shopping centers (46% and 44%, respectively).
For this, people interested in investing in the purchase of real estate in Spain - whether foreign or Spanish - should take into account certain considerations about the legal situation of the property and about the local tax system. This Tax on Real Property (IBI), whether rustic or urban, is a requirement of municipalities, mandatory and accrued annually.
Depending on the Autonomous Community in which the property is bought, it is necessary to add to the final price between 8% and 13% for various but non-negotiable items, which must include:
- VAT and / or Tax on Patrimonial Transmissions. As for VAT, it must be paid when buying a new property and constitutes 10% of the sale value (25,000 euros for a local of 250,000 euros, for example). In the case of the Transfer Tax, must be paid when buying a second hand property and is between 5 and 8% of the price reflected in the deeds (this depends on the autonomous community).
- Documented Legal Acts Tax (AJD). This is an autonomous tax, whose amount varies according to the Community where the property is located and ranges between 0.5% and 1.5% of the value of the sale.
- Tax on the Increase of Land Value. It is traditionally called the Goodwill Arbitration or municipal surplus value and is a tax framed in the local tax system of Spain, which taxes the increase in value of urban land as evidenced at the time of transmission. This type of tax should be paid when it is carried out: the transfer of a property for any title and / or the constitution or transfer of any real right of enjoyment, limiting the domain, on said lands.
While investing in real estate is a cost-effective option for those who have capital, the process of buying and selling involves legal and tax considerations that can extend the process. However, they must be taken into account to bring the process into line with legality and avoid sanctions and penalties.