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, either you are a resident in Spain or not.

In this article we will explain you about the taxes you will have to pay as a buyer of a property in Spain.

Taxes when buying a property in Spain

  • VAT (IVA)this tax applies for residential properties being sold for the first time (never previously occupied), or for commercial properties and plots of land. At present VAT is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land.
  • Stamp Duty & Actos Jurídicos Documentados – AJD – is up to 1% of the price of the purchase and is only paid for a newly built properties.
  • Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP) – applies if the property is deemed to be a second or posterior transfer (not the first time a newly built home is bought). The general rule of ITP is 7% and the rate you pay depends upon the autonomous region where you buy (10% in Catalunya for example).
  • Notary Expenses – are calculated in relation to the purchase price declared in the deeds of sale.
  • Property Registry Inscription Fees – expenses related to inscribing the sale with the land registry are also calculated in relation to the purchase price declared in the deeds of sale.

 

In Summary, allow for up to 10-15% of the purchase price in taxes and other costs.

If the buyer takes out a mortgage these costs can be somewhat higher due to an additional public deed for the mortgage and the inevitable bank charges involved.

Taxes when owning a property in Spain

  • Property Ownership Tax (Impuesto Sobre Bienes Inmuebles – IBI) – a local tax on the ownership of property in Spain, irrespective of whether the owner is a resident or not. Calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value) set by the town hall the tax rate goes from 0.4% – 0,9% of the valor catastral depending on the Spanish region.
  • Annual Wealth Tax (Impuesto Sobre Patrimonio). Residents and non-residents are entitled to the following deductions per person – €700,000. The tax rate is around 0,2 to 2,5% depending on the price of the Real Estate Property.
  • Personal Income Tax for Non-residents (Impuesto sobre la Renta de No Residentes – IRNR).  
Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property. The tax rate is fixed as 24,75% of 2% of the valor catastral of the property. 
If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty – if any – between Spain and the country of origin of the non-resident).

Our lawyers provide tax and accounting services,  management and optimization of taxes in Spain.