When it comes to buying a property in Murcia, Spain, understanding the various taxes and fees involved is crucial. Property tax can be a complex topic, especially if you’re new to the region or to the Spanish property market in general. In this guide, we’ll break down everything you need to know about property taxes in Murcia, from the initial purchase costs to ongoing taxes and other related fees.
1. The Basics of Buying Property in Murcia
Before going into the specific taxes, let’s start with a brief overview of what you should expect when buying property in Murcia. The region, known for its beautiful coastline, mild climate, and relatively affordable real estate, is a popular choice for both expats and locals. According to the latest study by the BBVA Research Real Estate Observatory a significant number of foreigners are choosing Murcia as their preferred destination, it’s cheaper than neighbouring regions like Alicante and Valencia, plus nearly 30% of all property transactions in the first quarter of this year were by foreigners.
The most important thing you should know when you decide to buy a property is that the cost of the house, is not the overall cost. Much like buying in the UK or in your home country, in addition to the purchase price, you’ll need to budget for several taxes and fees.
As a general ‘rule of thumb’ you’ll need an additional 12-15% on top of the purchase price, but let’s now explore these in more detail, so you are fully prepared.
2. Property Purchase Taxes
The primary tax you’ll encounter when buying a property in Murcia will depend on whether you choose to buy a Re-Sale property or a New Build.
For a Re-Sale property: the ITP or Transfer Tax is paid by the buyer and is calculated as a percentage of the property’s purchase price, which in Murcia equates to 8%.
For a New Build property: the VAT/IVA, is fixed at 10%, plus there will also be Stamp Duty which is typically around 1.5%. Both of these are also paid by the buyer.
3. Ongoing Property Taxes: IBI
Once you own a property in Murcia, you’ll need to pay an annual property tax known as the IBI. Similar to council tax in the UK or property tax in the US it’s used to fund all the local services provided by the local government or council.
Calculation: IBI is based on the cadastral value of the property, which is typically lower than the market value. The tax rate usually falls between 0.4% and 1.1% of the cadastral value.
Payment: The bill for IBI is usually sent out once a year, and it’s important to ensure it is paid on time to avoid penalties.
4. Income Tax for Non-Residents
If you’re a non-resident (i.e. you aren’t there for more than 183 days a year) and own property in Murcia, you must pay non-resident income tax. This tax is due whether you rent out the property or it’s only for personal use.
- Imputed Income: Even if you don’t rent out your property, Spain assumes you earn income from it, known as imputed income. It’s primarily based on the Cadastral value of the property and is set at 19% for EU residents and 24% for non-EU residents.
- Rental Income: If you rent out your property whether it’s for the whole year or only partially throughout the year, you’ll pay a rental income tax of 24% on the gross rental income if you’re from a non-EU country or 19% if you’re an EU citizen. Reasonable deductions can be subtracted to reduce the taxable amount.
5. Additional Costs to Consider
Aside from taxes, there are other fees associated with buying and owning property in Murcia:
- Notary Fees: These fees cover the cost of signing the purchase deed and vary based on the property price but generally range from €800 to €1,500.
- Land Registry Fees: Registering your property in the Land Registry is essential and typically costs between €400 and €600.
- Legal Fees: It’s highly recommended to hire a lawyer when purchasing property. Legal fees usually range from 1% to 1.5% of the property price.
- Home Insurance: While not a tax, home insurance is something every property owner should budget for. Costs vary based on coverage and property value.
6. Selling a Property – (Capital Gains Tax)
If you sell a property in Murcia, you might have to pay the Plusvalía tax. This tax is levied on the increase in the land value of the property during the time you owned it.
- Calculation Method: Plusvalía is calculated based on the cadastral value of the land and the number of years you’ve owned the property. It’s a municipal tax, so rates can vary.
- When It’s Due: Plusvalía is paid upon the sale of the property, and typically, the seller is responsible for covering this cost. However, it’s not uncommon for this to be negotiated as part of the sale agreement.
7. Conclusion: Plan Ahead to Avoid Surprises
Understanding property taxes in Murcia is essential for anyone looking to buy or own property in this beautiful region. From the initial purchase tax to ongoing costs like IBI and potential income taxes, there’s a lot to consider. By being aware of these costs upfront, you can budget effectively and avoid any unwelcome surprises. With the right preparation, owning property in Murcia can be a rewarding and enjoyable experience.
Whatever you decide to do it’s always advisable that you speak with a local tax adviser of lawyer who can guide you through the process and ensure you comply with all the regulations.
As always if you need any further information or are ready to start searching for your new home in Murcia, please contact Simply Spanish Homes and we will happy to assist you.