Taxes and costs when buying a property in Spain: What do you need to know?
Dreaming of a second home on the sunny Costa del Sol? Before you take the plunge and buy a property in Spain, it is important to be aware of taxes and additional costs. In this blog, we explain step by step what costs you can expect when buying a house in Spain. That way you won’t face any surprises!
1. Transfer tax (ITP) or VAT on purchase
The transfer tax (Impuesto sobre Transmisiones Patrimoniales – ITP) applies when buying an existing property and varies by region. In Andalusia, this tax is currently:
8% for homes up to €400,000
9% for properties between €400,000 and €700,000
10% for properties above €700,000
Are you buying a new-build home from a property developer? Then instead of transfer tax, you will pay 10% VAT (IVA) plus 1.5% stamp duty (AJD – Actos Jurídicos Documentados).
2. Notary fees and property register
Having your purchase notarised is compulsory in Spain. Notary fees typically range between €800 and €1,500, depending on the purchase price and complexity of the transaction.
In addition, the property needs to be registered in the Property Registry (Registro de la Propiedad). The cost for this is between 0.5% and 1% of the purchase price.
3. Lawyer and legal fees
Although not compulsory, it is highly recommended to hire a lawyer for the purchase process. Your lawyer will check the purchase contract, the legal status of the property and ensure that there are no outstanding debts on the property. The cost for this is on average 1% of the purchase price.
4. Municipal Plusvalia tax
Plusvalia tax is a municipal tax on the increase in value of the land on which the property stands. Although this tax is normally paid by the seller, as a buyer you may have to negotiate this.
5. Wealth tax and annual fees
After purchasing your Spanish property, you will need to take into account annual taxes such as:
Wealth tax (Impuesto sobre el Patrimonio) – Non-residents are exempt up to €700,000 per person.
Property tax (IBI – Impuesto sobre Bienes Inmuebles) – This is a municipal tax and varies by location, usually between 0.4% and 1.1% of the cadastral value.
Rubbish tax and community fees – If you buy a property in an urbanisation, you will pay service fees for maintenance and facilities.
Conclusion: be well prepared!
Buying a property in Spain is a fantastic investment, but it also comes with various taxes and costs. Make sure you set a realistic budget and get good advice from experts.
If you are curious to know exactly what costs you can expect for your dream property on the Costa del Sol, feel free to contact our estate agency for personal advice!
