Purchasing Property Menorca Costs

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As an approximate guide, allow 10% of the purchase price. The purchaser pays the following:-
· 7% purchase tax;
· 1˝ - 2˝% notary and land registry fees (depending on the value of the plot or building);
· Your lawyer's costs. These vary from lawyer to lawyer, but they will always give you an estimate of their costs before buying;
· Power of Attorney; and
· Making a Will.

The taxes that the homeowners will be liable for in Spain fall into two groups:
· The property taxes that are paid as a result of buying a house; and
· The annual taxes that are paid as a result of owning (and perhaps letting) a house.

Spain has two principal forms of taxation - WEALTH TAX and INCOME TAX. Most people regardless of whether they are resident in Spain or not will have to make some kind of tax declaration every year.

The total list of taxes you could be liable for looks rather daunting, but there are no particular surprises in it. There are a number of obvious ways in which you can be taxed as a homeowner and with the exception of Wealth Tax, the Spanish list is more or less identical to the UK list:
· If you buy a new home you will pay IVA, the Spanish equivalent of VAT (to the State);
· When you have paid for your home, you will be liable for rates (paid to the Town Hall) and PATRIMONIO -Wealth Tax (paid to the State);
· If you let your home (and if you are a non-resident, even if you do not let you home), you will have to pay RENTA - Income Tax (paid to the State);
· When you sell your home, you may pay PLUSVALIA (paid to the Town Hall) and CAPITAL GAINS TAX (paid to the State) - As from 1st January 1997, the Law related to Capital Gains Tax changed. Please ask for additional Information; and
· If you transfer your home (either by gift or through a Will) you may pay plusvalia (paid to the Town Hall) and INHERITANCE TAX (paid to the State).

Everybody who has any kind of financial interest in Spain (and this includes the foreign property owner), must have a fiscal identification number. If you are only a tourist, without owning property, you do not need this identification and you do not need it if you only have a bank account in Spain. However, as a property owner and thereby as a person liable to tax, you must be able to identify yourself. In future, the tax authorities will ask for this number on all tax forms, when you make a title deed, when you want to open or use a bank account or when you make a contract for electricity, water or telephone.

There are two kinds of numbers. The first of these is the NIE (NUMERO DE IDENTIFICACIÓN DE EXTRANJEROS) that you get when you apply for a resident's permit. The second number is the NIF (NUMERO DE INDENTIFICACIÓN FISCAL) which is your fiscal number.

If you have an NIE, then that will also be used as you NIF. You get an NIE from the local police station with a Foreigner's Department. FINCAS LA ISLA or your lawyer can organise this for you. The offices of the HACIENDA (The Ministry of Finance) issue the NIF. FINCAS LA ISLA or your lawyer can help you to obtain one.