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If you are planning to buy a house, here are some tips.

Purchase a property is an important decision because of the present and future costs that will result from the use and destination of it. 

The first aspect to consider is the origin of the property. If the purchase is for a newly-built, it is subject to VAT; nevertheless, in the second and later transmission of the housing, the tax applied is the Property Transfer and Certified Legal Documents Tax (ITPyAJD), unless waived exemption. Assessing this first point, is more beneficial to make the purchase through a company to deduct VAT.

Secondly, if our intention is capture rents from the property leasing, we have to consider the taxation depending on the destination to be given to such lease.  If we lease as a residence, the operation will be exempt from VAT, and pay tax on capital transfers and documented legal acts (ITPyAJD 10%). However, if the lease is destined for an economic or professional activity, will pay tax on VAT (21%), regardless of it being a homebuilding.  

Despite this, is especially interesting the purchase through a Patrimonial Company when we acquire or manage a wide range of properties. In such cases, an employee can be contract to manage daily the properties, obtaining tax benefits.

Despite the small brush strokes given in this article, we must remember that real estate management is a complex issue that have to be adapted to the real situation of each client.

Author: Richard Edo (Legal Area)