In our aim to always offer you a comprehensive service and make the purchasing process easier, please find enclosed a few lines about the tax implications that could arise from a real estate transaction in the Balearic Islands.
Are you a purchaser?
The purchase of a real estate located in Balearic Islands would be levied with indirect taxes, no matter if you are resident in Spain or not. Which ones?
In case of a house, taxes would depend on whether it is a new or a second-hand house:
Bealaric TPO progressive rate, General Rule
|
Real Estate Price until (€)
|
Tax Liability (€)
|
Rest of the price (€)
|
Applicable rate (%)
|
|
0,00
|
0,00
|
400.000,00
|
8
|
|
400.000,01
|
32.000,00
|
600.000,00
|
9
|
|
600.000,01
|
50.000,00
|
onwards
|
10
|
In the case of parking spaces ((excluding garages annexed to houses with a maximum of two, in which case it follows the general rule described in the above table), the table below is to be considered:
Balearic TPO progressive rate, Parking Spaces
|
Real Estate Price until (€)
|
Tax Liability (€)
|
Rest of the price (€)
|
Applicable rate (%)
|
|
0,00
|
0,00
|
30.000,00
|
8
|
|
30.000,01
|
2.400,00
|
onwards
|
9
|
(TPO) passed by the Balearic government QFL 2012/281277 Ley Baleares 15/2012 de 27 diciembre 2012.
In case of plots, taxation would depend only whether the purchaser and/or the vendor are enterpreneurs/professionals or individuals.
According to the criteria of Spanish Tax Authorities, in order to be considered as housing and not as a land, the construction must be finished and the corresponding certificate of occupancy has been provided. For that reason:
BUILDINGS UNDER CONSTRUCTION, not finished, VAT at 21%
OLD BUILDINGS in need of DEMOLITION, would be considered as PLOTS .
The vendor is responsible of paying VAT to the TAX Authorities.
The purchaser is responsible of paying the TPO to the TAX Authorities.
Other important issues for the purchaser
In case the vendor is a non-tax-resident, according to the Non-resident Income Tax Spanish Law, the purchaser must withold a % of the price (currently, 3%) and pay it to the Tax Authorities on the vendor’s behalf.
On the other hand, in case of individuals other tax implications could arise once the investment has been carried out:
Finally, we can not forget mentioning Gift and Inheritance Tax.
The lucrative acquisition of a real estate located in Spain would be taxed on GIT at a progressive rate.
GIT liability could be almost zero in case Balearic legislation applies. Therefore, both parties, donor/deceased and donee/heir should be Spanish tax resident. Some other location requirements, should be met, for example, in case of inheritance, deceased should be tax resident in Balearic Islands for several years.
However, in case any of the parties were non-tax-resident in Spain at that moment, State legislation would apply, so any important reductions would be applied in this case.
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