The purpose of these notes is to briefly summarise the tax implications when purchasing a home for personal, holiday or similar use in San Sebastian, when it is not the main residence of a non-resident.
What taxes must I pay if I purchase a home in San Sebastian?
1.- Home purchase tax:
Taxes are different, depending on if the real estate is purchased from a private party or a developer. In other words, if it is second-hand or a new construction.
a) Second-hand dwelling: Impuesto sobre Transmisiones Patrimoniales (Property Transfer Tax) (ITP):
In general, tax is 4% of the purchase price of the dwelling and parking garage spaces, with a maximum of two units and their annexes if located in the same building and they are transferred together.
If the parking garage spaces are not located in the same building, the applicable tax rate when purchasing them is 7%.
b) New dwelling: Value-Added Tax (VAT) and Impuesto sobre Actos Jurídicos Documentados (Document Duties) (AJD)
If the dwelling is purchased directly from its developer, the price paid to the vendor already bears the VAT, which is 10% (also taxed at the reduced rate are a maximum of two parking garage spaces, when they are located in the same building)
To formalise the purchase with a Notary and register the real estate at the Property Registry, procedures related to the purchase, the AJD shall be paid at 0.5% of the purchases price, VAT included.
2. Property holding taxes (annually)
Every year, the owner of the real estate must pay the following taxes:
- Impuesto sobre la renta de no residentes (Income tax for non-residents) (IRNR):
Non-residents in Spain pay the IRNR, merely for owning urban real estate, this being considered the existence of imputed income.
Specifically for real estate located in San Sebastian, the imputed income is calculated by multiplying the cadastral value by 1.1 percent.
The cadastral value is assigned by the Administration to each piece of real estate and can be viewed on the Provincial Council of Gipuzkoa's website.
The IRNR quota payable is calculated by multiplying the imputed income by a tax rate of 19% for taxpayer residents in the European Union, and 24% for residents outside the EU.
- Impuesto sobre la riqueza y las grandes fortunas (Wealth and Large-Fortune Tax) (IRGF):
Non-residents with real estate assets in Spain may be obligated to pay this tax on assets and rights they own that are located in Spain.
For the purposes of this summary, we are referring to non-residents who exclusively own real estate located in San Sebastian.
If the cadastral value of the real estate exceeds 700,000 euros, this tax must be paid, applying a tax rate to the amount above 700,000 euros that oscillates between 0.25% and 1.5%.
- Impuesto sobre bienes inmuebles (Property Tax) (IBI):
Generally, the IBI quota is calculated by multiplying the real estate's cadastral value by 0.4 per thousand, with a 25% surcharge for not being the main residence, which means 0.5 per thousand.
Since owning a home entails certain tax obligations, the taxpayer must have an assigned tax ID number. To obtain this, the taxpayer must previously obtain a Número de Identificación de Extranjero (Foreign ID Number) (NIE), which is processed by the General Directorate of Police.
All taxes are paid to the local administration of Gipuzkoa, the Provincial Council that has entire oversight over these taxes.
CIALT. Asesores Legales y Tributarios.