As a buyer of property in Spain there are a number of costs and taxes over and above the property price that you will have to pay and it is important to be clear from the outset the real costs you will face when you buy property in Spain

Depending upon whether you are buying a new property from a developer, or a resale property from a private individual, you will either have to pay VAT & Stamp Duty, or a transfer tax. The different cases are explained below, along with the other costs and taxes that are common to both cases

Buying a New Build Property from a Developer or Bank

  • VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)

These taxes apply for residential properties being sold for the first time (never previously occupied), or for commercial properties and plots of land. This is a national tax, so VAT is the same wherever the property is located

At present VAT (known as IVA in Spain) is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land

The Stamp duty (known as AJD) is 1% of the price of the purchase, but may be dearer in some regions

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

Buying a RESALE from a Private Individual

  • Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)

This tax applies if it is not the first time a property is bought, and is paid by the buyer. Stamp duty is included in this tax and you must pay this tax before the Escritura (title deed) can be registered in your name

The Transfer Tax rate is decided by the autonomous region where the property is located, and they can choose to apply the general rate, or their own rate

The general (national) rule of ITP is 7%, but many regions charge higher local rates

Income Tax Provision When Buying From Non-residents

If the seller is not a Spanish resident, 3% of the purchase price has to be withheld and paid to the tax authorities

Other Costs

  • Notary Expenses

Notary expenses are always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale.The Notary’s fees can vary between 450€ to 1000€ but average at 1% of the declared value of the property

  • Property Registry Fees
    The registry fees are based on the registered value of the property, and are usually about 1% of the purchase price declared in the deeds, although in some regions they are considerably lower. The fees are paid by the buyer
  • Plus Valia Tax (Capital Gains Tax)
    This is a tax relating to the property, and it is calculated and applied by the local Town Hall in respect of the increase in the value of the land since it was last sold. This tax is normally paid for by the vendor
  • Agency Fees

Estate agency fees or commissions are paid to the agent by the seller. Agents charge between 2% and 15% of the sale price and you may be asked to contribute to the cost if more than one agent is used. As a rule, the cost is built into the sale price

  • Legal Fees

A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many charge around 1- 1.5% of the purchase price

  • Mortgage costs

If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This is paid for the by the buyer and can cost around 500€. Then there will be the costs of the mortgage itself. This varies according to the  provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Finally a  mortgage will increase the Notary expenses

  • Money Transfer Costs

To pay for the property, you will more than likely need to write a banker’s cheque or  make a money transfer. In order to do that, you will need to open an account in a  Spanish bank and transfer money from the bank in your country. The cost of  transferring the money can go up to 0,4% of the amount transferred. The banker’s cheque will most likely cost 0,5% of its amount. Currency Exchange companies offer a more competitive rate for transfers than banks and we can put you in touch with some we have used in the past

In Summary, allow for up to 15% of the purchase price in taxes and other costs