Ventura Garcés | Giménez Torres Abogados
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Foreigners can own and occupy real estate and can hold shares in property owning companies. There are no restrictions on foreigners owning or occupying real estate.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
No. There are no restrictions on lending for the purchase of real estate by foreign companies.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
When buying a new property or full rehabilitated from a developer, the buyer must pay Value Added Tax (VAT) (known as IVA in Spain) and Stamp Duty. At present VAT rate is 10% on the purchase price of residential properties and 21% for commercial properties and plots of land. The tax rate for Stamp Duty varies between 0.5% and 1,5% depending on the autonomous region where the real estate is located.
When buying a property that has been sold before (i.e. not the first time a newly built home is sold) the buyer must pay Transfer Tax (TT) (Impuesto sobre Transmisiones Patrimoniales – ITP). In this case there is no VAT to pay, and Stamp Duty is already included in this tax. The general TT rate is 6%, but many of the autonomous regions have applied higher local rates, which can reach 11% (i.e. Catalonia).
With respect to the Notary’s and Land Registry’s fees, the market practice is that these fees are nearly always paid by the buyer. The Plusvalia Municipal Tax (local tax on the increase of the value of the urban land) is also normally paid by the seller.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Municipal Property Ownership Tax must be paid annually to the municipal council. The burden of the IBI tax can be passed on to the tenant but the party responsible for paying the tax to the tax authorities is the owner.
Non-Residents Income Tax must be paid in case of summer houses, properties rented or not rented. I all cases the owner shouldpay this tax an it cannot be passed on the tenant.
Wealth Tax must be paid or just submitted in case the acquisition value of the property exceeds certain thresholds. The owner should pay this tax, it cannot be passed on to the tenant.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are no tax breaks for foreigners who buy real estate in Spain, but they are entitled to obtain a residence visa (Golden Visa) if the amount invested is equal to or greater than 500,000 euros (net).
How is the ownership of Real Estate evidenced in your jurisdiction?
The Land Register provides evidence of title. The registration system provides legal certainty to all parties involved in a transaction. A right or title recorded in the registry prevails over any other right or title. The transfer of real estate or the grant of rights over property should be executed by public deed in front of a notary before being registered with the Land Registry.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The name of the owner is one of the details that must appear in the Land Registry and cannot be kept confidential.