Property related taxes in Estepona and Spain, all you need to know.
1. Taxes and Costs related to Purchasing a property in Estepona.
When considering property prices in Estepona, whether online or in brochures, remember these are vendor net prices. Additional purchase taxes and costs need to be added to the vendor's agreed price.
Types of Property Purchases:
Brand New Properties: Purchased from developers, these attract a 10% VAT and 1.2% stamp duty. VAT is due on the notary signing day.
Resales Properties: These incur a 7% transfer tax, payable within 30 days post notary signing.
When dealing with high-end properties, the difference in the final cost of a brand new property and a resale one of the same price can vary, reaching up to more than 100.000€.
Something you should keep in mind during the search process for your future home or investment
Additional CostsLegal Fees: Typically 1% (+VAT) of the purchase price. While not mandatory, hiring a lawyer is advised for due diligence and after-sale services.
Notary and Registry Fees: Estimated at 0.25% of the asking price, though this can vary.
Bank account Fees: Charges apply for fund transfers or banker's drafts.
Mortgages: Main cost is property valuation, ranging from 500€ to +2,000€.
Technical Due Diligence: Optional but recommended for secondhand properties to assess installations. Costs vary based on property size and work scope.
2. Taxes for property Owners in Estepona.
Owning a property in Estepona comes with annual taxes and costs. These are determined by factors like the property's purchase price, location, size, and cadastral value.
Taxes for Non-Residents
If you're not a resident in Spain but own property there, you're liable for a non-resident tax. This applies whether you rent out your property or not.
Many overlook this tax, but it's essential to note that the tax authorities will check for its payment when you decide to sell. Delayed payments can accrue interest and additional costs.
This tax applies to properties purchased for over €700,000 per individual. The net purchase amount is considered, and the tax rate ranges from 0.2% to 2.5%, depending on total wealth and residency status.
Property-Related Taxes and Costs
IBI (Municipal Property Tax)
An annual tax, its amount varies based on the property's cadastral value and its municipality.
A minimal annual fee, typically under 400€, for garbage collection.
These aren't taxes but mandatory costs for properties within communities. They generally range from 200€ to 1.000€. Non-payment can lead to severe consequences, including property seizure.
Other fixed costs
Monthly bills for electricity and water have a fixed minimum charge, with additional costs based on consumption.
3. Non-residents and Fiscal residents in Estepona.
Understanding property taxes in Estepona is crucial, especially the distinctions between non-resident and fiscal resident taxes. Here's a simplified guide to help you navigate these waters.
Non-Resident vs. Fiscal Resident: The Basics
When you purchase real estate in Estepona, annual taxes apply. Your status - either as a fiscal resident or non-resident - determines the specifics. It's essential to be informed to avoid unexpected tax surprises.
Key Taxes for Non-Fiscal Residents
Spanish Non-Resident Tax
Regardless of renting out your property, this tax is mandatory. If you don't rent, you'll pay an imputed income tax. If you do, the tax is on the rental income. The rate stands at 24%, but for EU, Iceland, and Norway residents, it's 19%.
Spanish Wealth Tax
This is calculated on your property's net value, with a tax-free allowance of €700,000 per individual.
Municipal Property Tax
Determined by the property's cadastral value, this rate can vary by region.
Becoming a Fiscal Resident: How and Why?
If you spend over six months in Spain or have significant ties (like family or primary business), you might be deemed a fiscal resident.
This status can affect your tax obligations. For instance, Spanish residents pay tax on global income and must declare overseas assets worth over €50,000. The Spanish income tax ranges from 19% to 47% for incomes exceeding 300,000 euros.
4. Taxes and Expenses related to Selling a property in Estepona.
Considering selling your Estepona property? It's essential to understand the associated taxes and costs. Let's break it down for you.
Key Costs and Taxes When Selling
Plusvalía (Capital Gain)
This tax applies to every seller, calculated based on the property's ownership duration and its cadastral value. It's typically a minor expense but essential to factor in.
This tax is levied on the profit from your property sale. Rates differ for non-residents (24%), residents (19%), and companies (25%). All associated costs, like agent commissions and legal fees, are deductible.
Real Estate Agent Fees
If you engage a real estate firm, like ours, to facilitate your sale, there's a fee involved. This fee, plus 21% VAT, is borne by the seller.
While not mandatory, hiring a lawyer for the sale process is advisable.
Mortgage Cancellation Fees
If your property has a mortgage, you'll bear the costs of its cancellation, including any early termination fees.
3% Sales Price Retention
For non-resident sellers, buyers are legally required to withhold 3% of the purchase price. This is later deposited with the tax office, and sellers can claim it back, minus any outstanding taxes.
5. Taxes and costs related to Rentals.
Considering renting out your Estepona property? Here's what you need to know.
If you have a property in Estepona that's often vacant, you might be contemplating renting it out. Before you do, it's crucial to understand the associated taxes and costs.
Whether you're considering short-term or long-term rentals, each has its own financial implications.
Key Financial Aspects of Renting Out Your Estepona Property
Your residency status determines the tax rate. Non-residents from the EU/EEA are taxed at 19%, while non-EU/EEA citizens face a 24% rate. Residents, on the other hand, are taxed progressively, ranging from 19% to 46% based on income.
TPO (Taxable Asset Transfer Levy)
This tax is often overlooked but is technically applicable for long-term rentals. However, it's usually a nominal amount.
If you engage a real estate agency to manage your rental, you'll incur fees. Most agencies operate on a "no win, no fee" basis.
Renting in Estepona: What tenants should know about taxes.
If you're eyeing a rental property in Estepona, we've got some uplifting news for you!
Understanding Rental Costs in Estepona
The rental price you spot online is typically what you'll pay, though there's always room for negotiation.
Generally, property owners cover real estate agent fees. However, in instances where a property is in high demand and multiple agents are involved, an agent might request a fee from you.
It's essential to be informed about any such fees upfront, and remember, you have the right to decline.
While not mandatory, it's wise to engage a lawyer when renting, ensuring all legal aspects are covered.
The Little-Known Tax
Technically, tenants should pay a transfer tax on their rent, roughly 24€ for every 6,000€. However, this is rarely practiced.
While there's a potential for penalties, the amount is so minimal that it's often overlooked.
A Tip for Potential Tenants
When considering long-term rentals, landlords might request references, such as tax returns, bank statements, or recommendation letters.
Providing strong references can be a game-changer, potentially swaying a landlord in your favor, even if another tenant offers a higher rent.
In essence, renting in Estepona is relatively straightforward. Ensure you're well-informed, and if you have any queries, don't hesitate to reach out to our team for expert advice.
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