Taxes and Costs
When you buy a property in Spain you have to pay two types of taxes and two types of fees for the registration of transfer of ownership:
Fees – for the notarization of documents of ownership and registration in the Register of ownership of real estate.
Taxes – the transfer of ownership of the property, the capital gains tax and an increase in the value of land, commonly called Plus valía. This is municipality’s tax.
Notary fees - you pay to the Notary (Notario) fixed fee according to official scale. Its size varies depending on the value of land, housing size and price, and is usually from € 350 to € 600.
The fee for registration in the Register of real estate transactions
There is a fee for the registration of real estate on your name in the official register of real estate, Registro de la Propiedad. It will be more or less the same amount as payment to the notary. Your lawyer or estate consultant before purchase can calculate the exact amount in your particular case.
Tax on transfer of property's ownership
This tax is called in Spain Impuesto de Transmisiones Patrimoniales (ITP), ranging from 8% to 10% of the value declared in the contract of sale. When you buy real estate from the developer in this case it will be IVA (value added tax) of 10%, because the sale is going to be a commercial transaction.
In addition, you will pay a fee for the documents (stamp duty) from 0.5% to 1.5%. So, when you buy the property in Spain the taxes will cost you about 9 -11% of their value, specified in the sales contract.
Draw your attention to:
With the price of the object up to 400.000,00 euros applies tax of 8%
For the properties with the price between 400.000,00 euros and 700.000,00 euros – 9%
And for the properties with the price more then 700.000,00 euros – 10%
For example, for the real estate, which costs 750.000,00 euros, applicable tax on the transfer of property rights (ITP) will cost you 64.000,00 euros according to the following calculation:
8% - < 400.000 euros, ie 32.000,00 euros
9% - from 400.000 euros to 700.000,00 euros, ie 27.000,00 euros, and
10% - > 700.000,00 euros, ie 5.000,00 euros
The tax on transfer of property rights for the parking space, that sold separately from the living area, can be calculated basing on the following scheme:
Less 30.000 euros – 8% tax
From 30.000 euro to 50.000 euros – 9% tax and
More then 50.000,00 euros – 10% tax
Tax on transfer of property rights is calculated on the basis of minimum taxable value of the property, but not from its price. The minimum tax value is set by the Administration of Andalusia region.
Please contact us to find out the exact minimum tax value of your property.
The second tax on the sale of real estate is Arbitrio sobre el Incremento del Valor de los Terrenos, a municipal tax on the increase in land value since its last sale. Usually it is called Plus valía, and its value can vary greatly. This tax is calculated on the basis of the official value of the land, which is always below the market, depending on the period of time between sales and of the city in which this property located. In most of cases (unless otherwise agreed) it paid by the Seller.
In addition to these taxes and fees that paid at the time of purchase of property, all property owners in Spain are required to pay annual taxes:
- The tax on imputed income, Impuesto sobre la Renta
- The annual tax on property, Impuesto sobre Bienes Inmuebles – IBI
Do not worry, despite the apparent complexity of the legislation, in comparance with other European countries, Spain is a country with one of the lowest tax rates on real estate, however our lawyers and tax consultants will help you to understand all the issues related to the payment of taxes.