Taxes on property transfers balearic islands

Property Sales Tax inThe Balearic Islands (Source AEAT) 1

Property Sales Tax Payable in SpainAll new properties in Spain are subject to IVA (equivalent toVAT in the UK & Ireland) whereas secondhand properties aresubject to ITP (Impuesto de Transmisiones Patrimoniales).IVA is set by the State government and ITP is set by theregional government. 2

Property Sales Tax Payable in SpainThe Spanish government announced on 19/08/2011 that theIVA rate would be reduced to 4%, down from the standard 8%,in order to promote the sale of vacant new properties in Spain.This specially reduced rate is valid until 01/01/2013 when it willchange to 10%. 3

Balearic Islands – Tax on Property TransfersSpanish property law in the Balearic Islands, (Law 6/2007,Article 13) establishes the rate of tax payable upon the transferof a second-hand property at 7%.This is however subject to a number of exceptions which areas follows: 4

Protected or Social HousingShould the property being purchased be one that is classifiedas being ‘Officially Protected’ by the public administration (i.e.built using public subsidies and sold at a lower value withsell-on restrictions) then the rate of tax payable is 1%. 5

First Home Purchase by Young and DisabledA special rate of tax of 3% is payable on the acquisition bycertain specified groups of purchasers of their first mainhome. The following criteria must be fulfilled:1) The purchaser(s) must have net income of less than€18,000 individually or €30,000 if joint declaration 6

First Home Purchase by Young and Disabled2) The home must be the first property owned by thepurchaser in Spanish territory3) The value of the property may not exceed €180,0004) The maximum size of the property is 120m 7

First Home Purchase by Young and Disabled5) The property may not be sold during the first 3 years ofownership6) To qualify the purchaser must be under the age of 36 or bedisabled to a degree greater than 65% 8

Initiatives for Large FamiliesLaw 6/2007 also provides a preferential tax rate of 3% forthose property acquisitions that are made by families withsufficient members to be considered as large families.Apart from fulfilling the main requirement of being a legallydefined large family, the following criteria must be satisfied: 9

Initiatives for Large Families1) The family must purchase the property within two yearsof having been classified as large2) Within two years of having been classified as a largefamily any prior home has been sold3) The value of the home may not exceed €240,000 10

Initiatives for Large Families4) The home must exceed the prior home by 10% in sizeor if the first home, may not exceed 150m5) The purchasers may not have net income greater than€24,000 if taxed individually or €36,000 if tax declaration ismade jointly 11

Initiatives for Large Families6) The purchasers must be one or both of the parents ofthe children that form the large family7) The purchaser must reside in the property for a periodof at least three years 12

For more information or assistance with legal or taxmatters from our network of local English-speaking property lawyers in the Balearic Islands, go to: Property Lawyers in the Balearic Islands 13

Taxes on property transfers balearic islands

by myAdvocate Spain on Nov 20, 2011

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