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Buying A Property In Spain: Costs And Taxes

Purchasing property in Spain seems to be a complicated experience, particularly for people relocating abroad and navigating Spanish real estate for the first time.

The process differs between countries and may vary significantly from what you’re accustomed to.


Purchasing a property in Spain involves more than just the purchase price. In addition to taxes, you’ll also incur fees for professional services.


Consequently, the total costs can amount to between 10% and 14% above the purchase price. It’s important to include this figure in your budget when planning for the purchase.


Please note that any property prices you see on websites, brochures, social media, or elsewhere, represent the net prices of the seller, and additional purchase costs and taxes must be added.


It is also important to note that the taxes, costs, and fees can vary depending on which location in Andalucia you have decided to purchase the property.


As a buyer of property in Spain, there are several costs and taxes over and above the property but property taxes depend on whether you are buying a new property from a developer, or a resale property from a private individual.


New or development refers to a property that has never been previously owned and is typically sold directly by the developer.

Resale refers to homes that have been sold at least once before.



Do I need to pay taxes when buying a property in Spain?


Indeed, when acquiring any property in Spain, there are legal obligations to pay taxes and associated costs.


When purchasing property in Spain, there are no specific restrictions based on residency status.

However, certain steps are essential like obtaining an NIE number, opening a bank account with a Spanish bank, and conducting thorough legal and fiscal due diligence beforehand.


What fees do you pay when buying a property in Spain?


It's essential to understand that any property prices you see on websites, brochures, social media, or elsewhere, represent the net prices of the seller, and additional purchase costs and taxes must be added. It is also important to note that the taxes, costs, and fees can vary depending on which location in Spain you have decided to purchase the property.


Is there are any differences in paying taxes when buying a brand new property from the developer or resale (pre-owned) property?


Yes, there are.

Brand-new properties acquired from developers are subject to Value Added Tax (VAT) at a rate of 10% and Stamp Duty at 1.2%, which are calculated on top of the purchase price.

VAT is typically due on the day of the notary signing.


Pre-owned properties have a Transfer Tax of 7%.

This transfer tax may vary depending on specific circumstances but is generally payable within 30 days following the notary signing.


NEW BUILD FROM A DEVELOPER 


There are only 2 taxes for the new properties:

  1. VAT (IVA)  – 10%

  2. Stamp Duty – AJD  (Actos Jurídicos Documentados) – 1,2%

 

  • VAT (known as IVA in Spain) is 10% on the purchase price of residential properties (new villas, new apartments, etc), and 21% for commercial properties and plots of land.

This is a national tax, so VAT is the same wherever the property is located (except the Canaries, which have their own version of VAT).

 

  • The Stamp Duty –  (known as AJD) is between 0,5% and -1,5 % of the price of the purchase. Buying in Costa del Sol, the rate is 1,2%.


Both VAT and Stamp Duty are paid by the buyer, and if any deposit is paid before the completion of the sale, such deposit will be subject to VAT at the moment of payment of this deposit.

In this scenario, there is no transfer tax to pay.


RESALE PROPERTY FROM A PRIVATE INDIVIDUAL 


For pre-owned homes in Spain, there is only one tax on the resale property purchase process, and that is the Property Transfer Tax (ITP).

The Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP) rate in Andalucia and Costa del Sol to be applied in 2024 is 7%.


This tax applies if the property is deemed to be a second or posterior transfer (i.e. not the first time a newly built home is bought), and is paid by the buyer. If any deposit is paid before the completion of the sale it is not subject to ITP pro rata.


However, the full amount of ITP still has to be paid upon completion. In this scenario, there is no VAT to pay, and stamp duty is already included in this tax.


Transfer Tax is also applied on other property types such as a garage space in a car park. In this case, it’s applied as a sliding scale as follows:

  •  8%  on garage spaces up to €30,000

  •  9%  on garage spaces priced between €30,000 and €50,000

  • 10% on garage spaces priced over €50,000.

 


COSTS THAT AFFECT BOTH NEW BUILD AND RESALE PROPERTY PURCHASES.


As well as paying taxes, you have to pay fees for services when you buy a home. They include the following:



  • Lawyer fees - 1% (+VAT) from the purchase price.

We highly advise use a lawyer at all times. A competent lawyer not only handles the transaction but also conducts thorough due diligence before the purchase, and provides after-sale services.


  • Notary and registry fees

Notary fees are based on various factors like the number of pages of the document, the identity of the purchasing and vending parties, the number of parties and the purchase price, etc. They are not fixed rates.


  • Bank account fees

For transferring funds to the vendor or issuing banker's drafts, it's important to note that nearly all purchases facilitated through the notary are conducted via banker's drafts rather than transfers.

Banks typically charge a commission for issuing these drafts or conducting important transfers, and the commission rates can vary significantly based on factors such as the client profile, the payment amount and the specific bank used.


  • Mortgage fees

If you need help from bank financing the purchase in Costa del Sol, your only expense would be the property valuation fee. This fee can range from €400-500 to over €1500, depending on the size and valuation of the property. All other costs and taxes are typically covered by the bank.


If you are looking into applying for a mortgage in a Spanish bank to purchase the property, currently Spanish banks can issue mortgages up to 50% of the purchase price.


Who pays the real estate agent?


The seller covers the real estate fees.


What other additional costs apply when purchasing a property in Spain?


When purchasing a property in Malaga and Costa del Sol, there are no further fees for the buyer but it's worth noting that some taxes, costs, and fees can vary depending on the specific location within Spain where the property is being purchased.


 

EXAMPLE OF THE PURCHASE TAXES OF THE NEW BUILD AND RESALE PROPERTY:








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