The costs and taxes when you buy property in Spain are:
The law indicates what costs correspond to the buyer (almost everything) and the seller (only the municipal capital gain, withholding (for foreigners) and the original of the deed).
• Public deed (Escritura pública) in the notary
Notary expenses are produced by the granting of the public deed of purchase. The costs of the notary are set by law and its amount depends on the amount of the property, although it may be increased by aspects of the notarial operation: the number of copies, extension of the deed, presentation, etc.
The notaries apply a fixed tariff established by the government in 1989, so all notaries in Spain charge the same for the same service. They can only give you a 10% discount, so the competition between them is only based on quality.
• Registration in the Land Registry
Are the fees generated by registering the purchase-sale in the Land Registry. They are also fixed by regulations and their amount depends on the price of the property.
There are variations that modify the general rules. So for example, there are changes for housing of official protection, of mountains, or of agricultural exploitations.
In this section we have two major differences according to the type of which kind of property you buy
- а. Taxes on the purchase of a new property
- b. Taxes on the purchase of second-hand property
a) Taxes on the purchase of new property:
1. VAT (value added tax): when the property is delivered for the first time, it pays the VAT (currently at 10%). They can pay a VAT of 10% (compared to 21% overall) buildings destined mainly for housing (buildings in which at least 50% of the constructed area is destined to housing), including garages and annexes in them that are transmitted to the time and as long as the number of parking spaces per owner does not exceed two units.
The purchase of a new home requires the buyer to pay the VAT to the seller, who will pay the tax into the public treasury.
The tax rates currently established are:
or 10% in general
or 4% in the case of officially protected housing under special regime or public promotion.
2. IAJD (Tax on Documented Legal Acts): this tax is generated by signing in the notary and subsequently registering in the registry. The applicable tax rate will be determined by each autonomous community, in general terms it would be between (0.5% – 1.5%) on the amount of the sale. This tax will have to be added to the VAT, so in a case of a new property the VAT is paid (10% or 4%) plus IAJD (0.5% – 1.5%).
b) Taxes on the purchase of second-hand property:
1. ITP (Property Transfer Tax: this is the tax levied on real estate sales and the alternative to VAT (IGIC in the Canary Islands) for the case of second-hand property. The amount is set by applying a percentage of the price deeded and depending on the autonomous community in which the acquired property is located, in most of the communities it is between (6% – 10%) There are also reduced rates for some cases (VPO, large families, young people …)
2. IAJD (Tax on Documented Legal Acts): as in the case of new property, this tax is generated by signing in the notary and subsequently registering in the registry. The applicable tax rate will be determined by each autonomous community, in general terms it would be between (0.5% – 1.5%) on the amount of the sale.
• Gestoría (if we ask for a mortgage)
It will be paid if a mortgage is opened to buy the property. The administrative manager performs all the necessary procedures until the registration of the deed of purchase in the Land Registry.
• Municipal capital gain
This is the municipal tax on the increase in the value of land of an urban nature and paid by the seller. This municipal tax, which should not be confused with the tax surplus, taxes the increase in value of the urban nature lands experienced during the years in which the seller has owned the home. for the calculation of the tax, the value of the transfer is not taken into account, nor the market value of the house, but the cadastral value.
According to the law, the seller pays, unless otherwise agreed between the parties. There is a period of 30 calendar days from the date of the writing to settle it in the town hall.