Spain - Tax Information

Taxes are unavoidable wherever you purchase property. This guide gives you the information you need to know when you buy your Spanish property.


Costs Involved In Purchasing A Spanish Property:

As a guide, you should budget between 10% and 12% of the purchase price to cover all the taxes and fees for a Spanish property purchase. In the Canary Islands, there are different rates of tax (which are lower than in mainland Spain) and you should ask your lawyer to give you a breakdown specifically for these islands.

Notary Fees - These vary depending on the circumstances and length of documents being notarised. You should ask about them before the day of signing as you will be expected to pay in full then.

Land Registry Fees (Gastos de Inscripción) - These vary according to the locality, type and value of the property. They are not strictly taxes but fees charged by the Land Registry to inscribe your title.

Taxes:

Impuesto Sobre Transmisiones Patrimoniales (Itp)

This is a transfer tax payable when you purchase land, a house, an apartment or a building plot from a private owner. It is calculated at the rate of 7% of the declared value of the property as expressed in the Escritura de Compraventa (Title Deed).

Severe penalties are payable in respect of under declarations which, in addition, can lead to Capital Gains Tax headaches at a later date, as the declared value on your purchase is the base line used by authorities when assessing the capital gain you make upon the eventual sale of the property.

Impuesto Sobre El Valor Añadido (I.V.A)

This is the Spanish equivalent of VAT. From January 2012 it is charged at the rate of 7% to 8% for properties which the price is below 400,000 euros and from 8% to 10% in case of higher prices. A similar increase applies in case of garages. (This does not apply to new builds which until the end of 2012 qualify for 4% vat)

AJD (Stamp Duty)

Stamp duty is payable by the purchaser at 1% of the purchase price on new property, however in 2012 this has been reviewed and may be higher.

Municipal Plusvalía

A local tax paid on the increase in the value of the property from the last transaction. Normally payable by the vendor but it may be stipulated that the buyer pays. Who pays this will be discussed in the negotiations and in consultation with your lawyer.

Disbursements

In addition to the above costs, there will be other payments made on your behalf by your lawyer such as the Land Registry search fee, bank charges etc.

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