The purchase of a property comes hand in hand with payments and fees, this is true in any country, including Spain. In this article we want to provide you with some useful information about the different taxes you will need to pay when you purchase your new Spanish home.
Real estate has always been a wise investment, since the value of your new property can increase over time and put money in your pocket if you want to sell further down the line. If you are interested in buying property in Spain, we have compiled a list of the taxes you will need to pay before you can enjoy the Mediterranean sunsets from your garden.
Buying Property in Spain: The Taxes
If you are considering purchasing a new property in another country, Spain is a great choice; whether you want a holiday home, an investment or a place to relocate, this Mediterranean country has everything you will ever need. Of course, buying a new house or apartment in Spain entails a series of taxes and expenses that may appear challenging to a foreigner, but no need to worry, at AEDAS Homes we have made a list with all the essential information you will need if you´re thinking about buying new property in Spain.
The VAT, or IVA in Spanish, is the most significant tax to pay when purchasing a new property in Spain. As of 2013, the VAT on new real estate properties was lowered to 10% -the regular taxation on other products is 21%.
In the case of purchasing a second-hand property, this tax does not need to be paid, although you will have to pay the ITP transfer tax instead, or Impuesto sobre Transmisiones Patrimoniales.
The Spanish AJD Tax
The AJD (Actos Jurídicos Documentados) is a tax on notarial acts to be paid to the public administration through the different Autonomous Regions. Depending on where the property is located, the amount can vary between 0.5% and 1.5%.
The Land Value Tax
This tax, known as Impuesto sobre Bienes Inmuebles (or IBI tax) in Spanish, is a yearly levy over the ownership rights on the land a property is built on. Town halls and state administration manage this payment jointly, although the owner has to pay through the local or municipal tax office. Once the money is disbursed, the property will be listed in the Spanish cadastre, that is, the land registry.
As well as the official taxes, buying property in Spain entails a few other fees for professional services, and these will depend on the real estate companies you work with or the legal advisers you hire. We have included a list of additional fees you will encounter when buying property in Spain below:
- Notary fees: Notaries charge for the preparation of documents, as well as for witnessing both parties’ signatures. Their rates will depend on the complexity of the deed and the purchasing price of the property.
- Legal fees: The use of a lawyer is not compulsory when buying a property in Spain, although it may be advisable to hire one, should you require a due diligence, representation in the presence of notaries, etc.
- Estate agent fees: These will depend on whether the property is new-build or a resale.
- Banking costs: If you will be transferring money to Spain, you may need to pay bank fees to cover the transaction.
If you are considering purchasing a property in Spain, at AEDAS Homes we would be delighted to give you further information about the paperwork and fees involved. We specialise in real estate on the Mediterranean coast, Costa Blanca and The Balearic Islands.