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Services of purchase-sale of a property in Spain

Our Costa Blanca real estate agents provide you with the most important aspects to take into account when buying or selling a property in Spain. In Spain Estate we take care of managing all legal and administrative procedures that can help the client to feel more comfortable and secure.

What are the incidental costs of buying a property in Spain?

• 1 One time costs when buying a property in Spain

  The additional costs for the purchase of a property amount to approximately 10% - 13% of the purchase value. They consist of the following taxes and expenses:

  • 1.1 Purchase of a used property:

    • 1.1.1 Property Transfer Tax (ITP - Impuesto Sobre Transmissiones Patrimoniales)

      If you buy a used property from a private individual, you will not pay VAT but the ITP, a land transfer tax. The amount of the tax depends on which Autonomous Region the property is and varies between 6% and 10%. The tax must be declared and paid within 30 days of the notary's appointment in the self-assessment procedure.

      In practice, usually, a Gestor (liquidator) participates in the notary's appointment and receives a check from the buyer about the land transfer tax for payment to the tax office.

      Important: The calculation basis for the tax office is the market value. If the Spanish tax authorities consider the authenticated purchase price and therefore the declared real estate transfer tax to be too low, they can estimate it and demand another lookup within four years - plus interest. The estimate of the tax office can be challenged with an expert review and, if necessary, subsequent court proceedings.

  • 1.2 Purchase of a new property by the developer:

    • 1.2.1 IVA (Impuesto Sobre el Valor Añadido):

      This is the Spanish VAT. It is to be paid instead of the land transfer tax for new buildings where the seller is a company. ITP (Real Estate Transfer tax) and IVA (VAT) are always alternative and not cumulative. The general VAT rate in Spain is currently 21% but for residential properties and garage parking spaces (maximum two per housing unit) a reduced tax rate of 10% applies, which is close to the real estate transfer tax.

      Basis of assessment is only the certified purchase price. The tax office cannot assert a higher market value. The VAT has to be paid by the buyer to the seller against the invoice. The seller then has to transfer them to the tax office, unless he still has input tax receivables from the construction phase, with which he can offset.

    • 1.2.2 Stamp Duty (AJD - Impuesto sobre Actos Jurídicos Documentados)

      If the sale of a property is subject to value-added tax (ie first occupancy), the so-called stamp duty will apply besides. The tax rate may vary from region to region from 0.1% up to 1,25% but usually amounts to 1% of the certified purchase price.

      The registration tax arises on certain legal transactions, including the ordering of a mortgage and a purchase contract if the transfer is subject to VAT.

  • 1.3 Attorney's fees (Gastos de Abogado):

    In Spain, when buying a property, it is customary to be advised and assisted by a lawyer who thoroughly reviews and explains the procedure until entry in the land register.

    The cost of the lawyer is about 0,5% - 1.2% of the purchase price plus VAT.

  • 1.4 Notary fees (Tasas de Notario):

    The notary's fee for drawing up the notarial deed of purchase is determined by an official fee schedule but lie between 0,2% and 0,3%.

    Under Spanish civil law, the seller bears the cost of producing the original document and the buyer bears the cost of the first and other certified copies of the contract of sale.

    However, it is customary for the contracting parties to agree that the buyer bears the entire costs of the notarial certification.

    • 1.4.1 Property Register Fees

      The registration in the Property Registry depends on the characteristics of the property, the location, and other variables, and tariffs set by law are applied. For example, for a house of about 100,000 euros, the price may be around 200 euros, including taxes.

      These would be the taxes to pay in case of acquisition of a home without the need of a mortgage loan

      In the case of requesting credit from a bank, we would have to add the derivatives of this management. If a MORTGAGE is requested to acquire the house, it is necessary to return to account. In addition to the financial cost involved in applying for a loan, it is necessary to consider that notary and registry expenses are doubled - having to register two different deeds, one for sale and one for mortgages - that it is mandatory to go through an agency and that it is necessary to assess the home.

      Summary of one time costs when buying a property in Spain (approximate rates, without guarantee):

      • Notary fees: about 0.2 to 0.3 percent
      • Property registry fees: approximately 0.25 percent
      • Gestoria fee (completes formalities such as register entry): approximately 200 to 1,000 euros
      • Lawyer: 0.5 percent to one percent of the purchase price plus VAT, more in complex cases
      • Mortgage (in addition to various fees, the AJD accrues): in total up to 2.5 percent

• 2. One time costs when selling a property in Spain

  • 2.1 Value Added Tax (Plusvalía - Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana):

    Here, the municipalities tax the added value of a property. The amount of the tax (approximately between 16 and 30%) is based on the cadastral value of the property (excluding the building value) and depends on i.a. also on how long the property was owned by the seller. The value varies from community to community and can be inquired there exactly.

    The tax must be paid by the seller. However, it is customary in Spain to agree in the notarial deed or the private contract that the buyer must pay the tax. Another way to negotiate is that buyers and sellers share the tax.

  • 2.2 Speculative tax (Impuesto de especulación)

    3% tax deduction on the purchase of a property from a non-resident "Retención" (sobre la Transmisión de Inmuebles de Non-Residentes)

    This tax is payable when you buy a property from a non-resident salesman. The advantage is that you do not really have to pay for it yourself. The buyer must reduce the purchase price by 3%. That means that he pays the seller only 97% of the purchase price. This sum of 3% is paid by the buyer as an advance payment on the income tax of the seller to the responsible tax office in Spain, according to the legal requirement.

    With this settlement option, the tax office secures the money early on, as it may be more difficult to make subsequent claims for non-residents who are located abroad.

    • 2.2.1 Resident and non-resident:

      A resident is anyone who stays in Spain for more than 183 days per calendar year whose economic focus is in Spain or whose spouse or dependent children live in Spain.

• 3. Current taxes when buying a Spanish property

  The Spanish tax office also applies to the ownership of the property of various taxes. However, the basis of calculation for these taxes is usually not the real value (valor real) but the cadastral value. The amount of the cadastral value (separated according to the value of the land and the land and the buildings) can be found in the annual council tax receipt or in the competent town hall.

  • 3.1 IBI: The Property Tax (Impuesto Sobre Bienes Inmuebles)

    The IBI is collected by the responsible municipality and is paid annually. The amount of the property tax is set by the municipalities and lies between 0.4 percent and 1.1 percent for developed properties in Spain and between 0.3 percent and 0.9 percent for undeveloped land, based on the cadastral value.

  • 3.2 IRNR: Income Tax for Non-Residents (Impuesto sobre la Renta de no Residentes)

    In the Case of non-resident property owners, there is a distinction is made between self-used and (partially) rented property.

    (A non-resident is anyone who does not stay in Spain for more than 183 days per the calendar year nor has neither economic focus or the dependent family in Spain)

    • 3.2.1 Self-used Properties

      In the case of non-resident income tax in Spain is also paid if no income has been earned with the property. Non-resident, who uses the property only for holiday purposes are taxed for the self-use advantage as a fictitious rental income. The tax is 19% of 1.1% of the cadastral value. Advertising costs or depreciation are not taken into account.

      The tax is for each property is to be declared and paid until 31.12. of the following. The self-calculated amount is to be transferred to the tax office. A sample calculation: With a cadastral value of 380,000 euros, 1.1 percent = 4,180 euros. At 19 percent means an annual income tax of 794.20 euros.

    • 3.2.2 Rented Properties

      If the property is rented, there is to be an income tax paid for that period of 19% on the rental income. However, various costs are deductible:

      • loan interest
      • insurance premiums
      • Local taxes and taxes
      • Maintenance and repair costs
      • Electricity, water, and other maintenance costs
      • Depreciation of up to 3 % p.a. on the building value

      The landlord has to submit the tax return quarterly. For each property and tenant, a separate formula must be completed.

  • 3.3 Property Tax (Impuesto sobre el Patrimonio)

    Since 2011 there is again a property tax in Spain. A distinction is made between the wealth tax of the central government and the wealth tax of the autonomous communities. The taxable non-resident can choose the cheaper option for him.

    Non-residents have a tax allowance up to 700,000 €.

    Residents also plus another allowance of 300,000 euros for the main residence.

    Anyone who is above these allowances, for example, because of the value of their real estate, will pay progressively between 0.2 percent and 2.5 percent wealth tax on net assets (assets after deduction of charges such as mortgages) in the central government model.

    The tax is to be declared and paid until 30.06. of the actual year taking into account the previous year. Non-residents are subject to Spanish wealth tax only with their assets located in Spain.

    A calculation example: Who as a non-resident in Spain has a million assets, such as in the form of property, pays 733 euros property tax.

    For more detailed information, please contact us

    *** The information is without guarantee, subject to change ***