When you buy a plot of land in Spain, it is possible that you have to declare the property for tax purposes. Declare your land purchased in Spain can help you avoid paying unnecessary taxes and keep their costs low.
You will know if you need to declare the land purchased in Spain because it will be listed as a special condition in your contract, along with several other documents that must be signed and returned to the seller or the real estate agent who handled the transaction.
If you have not yet bought a piece of land in Spain or if you are unsure whether or not you should file a declaration of your property in Spain, please review the following information. Understanding when and why to declare a property purchased in Spain can help you save money, time and stress later on.
What is a land acquisition declaration?
A land acquisition declaration or real estate declaration is a form that must be completed and submitted to the Spanish Tax Agency (AEAT) within three months from the date of signing a contract for the purchase of real estate in Spain.
The real estate acquisition declaration form should include information on the purchase and sale of real estate, such as the location of the real estate, the name and address of the seller, the purchase price and the date of payment.
If you buy a property, you are obliged to declare it even if you have not yet paid for it in cash. If you have borrowed money to buy the property, in most cases you will have to declare it and pay tax on the debt.
Property tax in Spain
In Spain, property owners are responsible for paying municipal taxes on their homes. This tax is called "impuesto sobre bienes inmuebles" (IBBI) or "Impuesto sobre Bienes y Derechos" (IBYD). There are two types of property taxes: the annual 'property tax' (IBBI) or 'goods and duties tax' (IBYD) and the 'housing preservation levy' (TCVB) or 'building preservation levy' (TCED). The annual property tax is based on the value of the property. In general, the higher the value of the property, the higher the tax.
Exceptions to the filing of a declaration of acquisition of land in Spain
There are some exceptions where land acquired in Spain does not need to be declared. These include: - If the purchase price is less than €9,000. - If the property is valued at less than €23,300 and the land acquisition declaration form is not signed or has not yet been issued by the seller. - If the seller is a government entity.
When must land purchased in Spain be declared?
If you buy a house or any other type of land in Spain, it must be declared within 3 months from the date of signature of the land purchase contract. In general, the land acquisition declaration form must be submitted within 3 months from the date of signing the contract.
You should also note that the land acquisition declaration form must be accompanied by the deed of release of title from the notary. If you acquire a property or any other type of land in Spain and have not yet declared it, you should do so immediately.
It is imperative that you submit the land acquisition declaration form and other required documents before the 3-month deadline expires. Failure to meet this deadline may result in the imposition of fines and additional taxes.
The importance of knowing when and why to declare land in Spain
Declaring land acquired in Spain is the first step to avoid paying real estate taxes. The declaration form for the acquisition of land must include the price purchase price and the date of payment. If the purchase price is less than 9,000 euros, you will not have to pay tax on the land. However, if the purchase price is more than 9,000 euros, you may have to pay tax on the land, regardless of whether you have paid it or not.
The Land Acquisition Declaration Form will help you determine whether you owe tax on the land and how much tax you will owe. When you file the land acquisition declaration form, you will receive a "provisional declaration of tax liability (DPIO)" or "declaration of tax liability (DOB)".
This document helps you to determine the taxes you have to pay for the land. If the purchase price of the land is less than 9,000 euros, you will not have to pay tax on it. However, if the purchase price is more than 9,000 euros, you will have to pay taxes on the land. The amount of tax you owe will be shown on the land purchase declaration form.
Strategies to avoid paying tax on newly acquired real estate in Spain
If you are liable to pay tax on the purchase of the land, you should consider reducing the amount you owe. There are a few ways to do this, including:
- Appeal the amount owed.
- Pay taxes in cash rather than by cheque.
- Pay land taxes with a credit card.
- Negotiating a payment plan with the AEAT.
If you have purchased land in Spain and have not yet declared it, it is important that you act as soon as possible. Failure to file the land purchase declaration form can lead to heavy fines and additional taxes. If you have purchased land in Spain and have not yet declared it, it is imperative that you do so immediately.
Failure to file the land acquisition declaration form can result in heavy fines and additional taxes.
Conclusion
Land is a valuable investment and a long term because it is something tangible that can be passed on from generation to generation. When buying land in Spain, it is important to declare it to avoid paying unnecessary taxes. If you have not yet bought land in Spain, you may want to consider doing so soon. Land is not only a valuable and long-term investment, it is also a great way to diversify your investment portfolio.