We have talked about property crowdfunding and many of the ways it makes investing easier. In this post, we will compare the taxes and expenses involved in purchasing a home in the conventional manner and those arising from buying one through collective financing.
Simplification of tax charges is yet another of the great advantages of investing in property crowdfunding projects. Investors pay less tax and it is easier to fill out your tax declaration.
Which taxes and expenses are involved in purchasing a home in the conventional way?
Apart from all of the management, notary, Land Registry and administrative expenses (which can easily add up to €2,500), you have to pay a very considerable amount of tax.
Value-added Tax (VAT) is payable on new homes. As of this year the rate is 10%. In addition, if you take out a mortgage, you have to add Stamp Duty (Actos Jurídicos Documentados – AJD) at around 0.5% to 1.5% of the sale price.
The biggest tax on a used home is Property Transfer Tax (Impuesto sobre las Transmisiones Patrimoniales – ITP). It depends on the region the home is in but generally rates vary between 6% and 10%.
The amount the taxman deducts from your profits from investing in an online platform like Propcrowd is much simpler to explain.
What taxes must you pay on investing in one of our projects?
The profits obtained from these kinds of products are taxable only as capital gains in your income tax (IRPF) declaration.
The money you earn is included in the tax base for savings in your income declaration and is subject to withholding at a rate that varies based on how much you make:
Up to €6,000 in profit: 19%
Between €6,000 and €50,000: 21%
Above €50,000: 23%
And that is it! So this is yet another of the great advantages of investing in property crowdfunding. The purchases and sales in which you share as an investor involve a set of expenses and tax charges, which we handle as the project’s promoters. Your tax bill is easy to understand and calculate. Interested?