Conveyancing a property through a company is becoming more and more frequent. Currently, they account for between 10 % and 15 % of transactions, while in the remaining 85 % of cases, the buyer is a natural person.
What is the difference in tax and fiscal terms between conveyancing a property through a company or as an individual?
When we buy a property as an individual, the taxes that affect the property will be paid through the IRPF (Personal Income Tax).
The corresponding tax rate will be applied according to the level of income because, for the tax authorities, the sale of the property only generates income in the IRPF when there is a capital gain for the natural person.
This is the main reason why it is increasingly common for buyers to consider the option of acquiring a property through a company that allows them to obtain savings and a greater tax benefit.
However, it should be borne in mind that these tax benefits only favour large estates and homes managed through asset-holding companies.
What difference does it make to the VAT deduction?
If the buyer has opted to buy through a company, VAT can be deducted in those cases where the expense is deductible. However, this option does not exist if the purchase is made by an individual.
Value Added Tax (VAT) is levied whenever a new-build property is purchased, regardless of whether the transaction is carried out by an individual or a company.
The purchase and sale of houses is taxed at the reduced rate of 10 % of the total value of the deed. If we were talking about subsidised housing (VPO), the VAT rate would be 4 %, although this may vary depending on the autonomous community.
Regarding the acquisition of garages, a 10 % of VAT is also applied with a maximum of two parking spaces for the new-build property. If there are more units, they will be charged at 21 %. Similarly, 10 % is payable for storage rooms and annexes.
What happens if the property is second-hand?
In the case of buying a second-hand property, no VAT is paid, but the Property Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, ITP), the management of which is assigned to the autonomous communities, must be paid. Therefore, each region applies its own tax rate.