Depending upon your circumstances, before you finalise the purchase of your Mallorca villa or country house for sale, speak to your lawyer with regards to the status you as future owner will have in order to limit unnecessary costs and taxes. When purchasing a property for sale, the residential status does not impact upon purchase taxes and costs: the resident and non-resident buyer will pay the same taxes.
The logical question however is: who will be in the better position when it comes to selling the Mallorca property, the resident or non-resident? The differences are substantial: the resident, who sells within the year of buying, will pay between 15% and 45% capital gains tax depending on the income of that year. However, if the property is sold one year after the purchase date, only 15% capital gains tax must be paid.
The non-resident seller will always pay 35% on capital gains, when the Mallorca property is sold, and the buyer will always have to retain 5% of the declared value which will go to the tax office as an on-account payment of the vendor’s capital gains tax.
So far, the resident is obviously in a better position when selling – there is another route for the non-resident. An option is to set up a Spanish SL company (Limited Company) and purchase the Mallorca property for sale through this company; this will reduce taxes upon the sale. The villa or finca for sale in Pollensa or Puerto Andratx will become the company’s only asset. If the SL company re-sells before a year is over, the company will have to pay 40% on capital gains!! However, if it sells one year after the purchase date, the SL will only pay 15% on capital gains, like a resident, which technically a Spanish SL company is! Another advantage is: the purchaser will not be obliged to retain 5% of the declared sales price as the on-account of capital gains.
Your lawyer can also advise with regards to inheritance circumstances and liable taxes, as the differences when inheriting the asset of an SL company or a non-resident can vary enormously – subject always to individual circumstances which must be considered.
Finally, when is it advisable to purchase a property for sale in Sóller or Campanet through a Spanish SL company? Now 2 factors determine this decision: the property for sale in Mallorca has a value higher than 300.000€ and the purchaser has no intentions of ever becoming a resident in Spain.