Purchase, Sale and New Construction

Understanding the tax implications of buying or selling a property is essential, whether you are a resident or a non-resident.

For Residents:

• Transfer Tax (ITP): This applies to the purchase of second-hand properties and is currently set at 10% of the purchase price in the Valencian Community. However, if the property value exceeds 1 million euros, the ITP increases to 11%.
• VAT: If you purchase a newly built property, you will be charged 10% VAT on the purchase price, plus a 1.5% Stamp Duty.
• Capital Gains Tax: If you sell your property, you may be subject to capital gains tax on the profits obtained. For residents, this tax ranges from 19% to 26%, depending on the amount of the gain.
• Municipal Tax (Plusvalía): This local tax is calculated based on the increase in the land value since you acquired the property. The rate varies by municipality.

For Non-Residents:

• Transfer Tax (ITP): This applies to the purchase of second-hand properties and is currently set at 10% of the purchase price in the Valencian Community. However, if the property value exceeds 1 million euros, the ITP increases to 11%.
• VAT: If you purchase a newly built property, you will be charged 10% VAT on the purchase price, plus a 1.5% Stamp Duty.
• Non-Resident Income Tax: Non-residents are taxed on income derived from their property. If you are an EU citizen, the rate is 19%, while non-EU citizens are taxed at 24%.
• Capital Gains Tax: Non-residents pay the same capital gains tax as residents (19% to 26%), but a 3% withholding is applied to the sale price to cover potential capital gains.
• Inheritance and Gift Tax: Non-residents must also consider inheritance and gift taxes, which differ from those for residents and may require specific planning.