If you are building on Mallorca, you should keep all your invoices.
It is important that these are issued in his name and show VAT. The invoices reduce the tax burden when the property is sold at a later date.
The future homeowner is legally considered a property developer in Spain. This means that he or she enters into a number of financial and legal obligations. However, some of them have advantages for the future.
It starts with collecting and storing invoices. Anyone who builds will receive a lot of them: From architects, contractors, building material suppliers, tax consultants, lawyers, offices and authorities.
Make sure from the outset that these invoices comply with legal requirements and, last but not least, that they are issued in your name and with VAT shown. Collecting invoices means a lot of paperwork to start with. However, it protects you from unnecessary costs when it comes to the possible sale of a property. This is because each individual invoice reduces the capital gains tax you have to pay.
Here's an example calculation: Someone pays a total of 300,000 euros for land and a new building. After a few years, he sells the property at a price of 700,000 euros. The profit of 400,000 euros must be taxed. In this case and without invoices, the capital gains tax is 96,000 euros. If corresponding invoices are available, however, the tax burden can be reduced by at least half or more.
