Like any other country, Spain is unfortunately no different when it comes to taxes. There are of course a range of taxes to be paid when buying. The particular taxes that will correspond to you will depend entirely on what type of property you intend to buy.
ABAD Lawyers and Accountants are continuously researching current taxation enabling us to correctly inform our clients of what they can expect and will have to pay when purchasing their property, as well as arranging the payment where needed. As well as any other costs they may need to consider.
Costs and expenses are always in addition to purchase price and depend on whether you are purchasing a new build or a second hand resale. The suggested additional cost on top of the purchase price is around 10% of the purchase price. This can work as an estimate when looking. When purchasing a property you will have to pay VAT and Stamp Duty.
Taxes on new builds and off plan
On new builds and off plan properties you have to pay VAT and Stamp Duty on the purchase. The equivalent VAT and Stamp duty in Spain are “IVA” and “AJD” – Actos Jurídicos Documentados. These tend to be around the 10% the price, on top of the price, but this is only for residential purchases only. There is a 21% VAT tax fee for any commercial purchases and plots of land purchases.
Stamp duty or AJD is only around 1% in some areas and more in other, so it is important to check which is the correct percentage, and may vary every year.
Usually a deposit is given at the beginning to secure the property before completion, in which case the deposit will be taxed upon payment and included for taxation.
Taxes on re-sales/second hand properties
In this situation different taxes correspond to the transaction, such as the Transfer Tax. The transfer tax is the “Impuesto sobre Transmisiones Patrimoniales” – ITP, which is to be paid by the buyers on any home where they are not the first owners. The transfer tax is to be paid when the purchase is completed, and in this case is the full amount of tax. This amount must be paid and cleared in full and is inclusive of Stamp Duty and VAT. The tax percentage differs from region to region, but tends to be around 7% or slightly higher.
When buying from a Non-Resident the buyer must hang on to about 3% of the purchase price to later pay the tax offices when completing. This must be done properly, because if it is not it is classed as a possible liability by tax authorities.
These taxes apply only to the actual obtaining of the property and there are other costs, expenses and taxes to consider for the after sale and maintenance of the property. Other common costs to consider are the following.
• Agency, legal and banking fees.
• Notary and property inscription expenses.
• Mortgage and other costs, such as a survey when necessary.