Costs when buying or selling a property in Lanzarote
The buyer incurs, except notary fees and registration costs at the Land Registry, only the real estate transfer tax of 6.5% of the purchase price. A total cost of maximum 10% of the purchase price can be estimated, which actually are slightly lower.
The seller must pay the so called Plusvalia (plusvalia municipal) the municipal capital gain to the relevant municipality
and the capital gains tax. These two taxes are often confused.
The Plusvalía (law of December 28th number 39/1988 tax on the increase of the value of urban land) with which the respective community participates in the appreciation of the land is a municipal tax in Spain. The level of the Plusvalía depends on the community, the location of the property and the duration of ownership, it can be obtained from the relevant registry office.
The capital gains tax.
For non residents a 3% of the declared purchase price needs to be retained at the notary and will be paid in the name of the seller to the Spanish Tax office (Hacienda)
The seller has now 4 month to issue a tax declaration on this. I case the resulting tax amount is less than the amount retained, the exceeding taxes will be returned, if it is higher, the balance has to be paid to the Spanish Tax office.
Foreign Residents be freed only by the retention (retención) of 3%, if they can be a fiscal resident certificado present at the Notary. The gain or loss (IRPF) made in the next income tax return. Since January 1st 2012 the tax rate is 21%.
Residents over 65 who sell their principal residence are exempt from the payment of the capital gains tax. The only prerequisite is that they have inhabited the property permanently at least three years and have submitted their income tax return in Spain during these three years.