Taxes when buying property in Spain.

Buying property in Spain is not just about paying the purchase price but also considering additional expenses related to taxes and fees. These costs can amount to 10–15% of the property's value, so it is crucial to factor them into your budget. In this article, we will explain in detail the taxes you need to pay and provide useful tips for managing them.

Main Taxes When Buying Property

The amount of taxes depends on the type of property (resale or new build) and the region where it is located.

1. Property Transfer Tax (ITP)

This tax applies when buying a resale property. The rate varies from 6% to 10% of the market value, depending on the region.

• Example rates by region:
  • Valencia: 10%
  • Andalusia: 7%
  • Madrid: 6%

Example calculation:

If you buy an apartment in Valencia for €300,000, the ITP tax will be €30,000 (10%). Learn more about document preparation for the transaction.

2. Value Added Tax (IVA)

This tax applies when buying a new property (first transfer of ownership). The rate is:

• 10% for residential properties (apartments, houses, villas).
• 21% for commercial properties.

3. Stamp Duty (AJD)

Stamp duty is paid when purchasing a new property and is charged in addition to VAT. The rate varies by region and ranges from 0.5% to 1.5% of the property's price.

• Example rates by region:
  • Valencia: 1.5%
  • Andalusia: 1.2%
  • Madrid: 0.75%

Example calculation for a new property:

If you buy a new apartment in Valencia for €300,000:

• VAT (IVA) will be €30,000 (10%).
• Stamp Duty (AJD) will be €4,500 (1.5%).

Total taxes: €34,500.

Other Costs Associated with Buying Property

1. Notary Fees

The notary verifies and formalizes the purchase transaction. Fees range from €600 to €1,500, depending on the property's value, and are subject to a 21% VAT. We recommend using legal assistance services.

2. Property Registration

After signing the transaction, the property must be registered in the Land Registry. Registration costs range from €300 to €600.

3. Legal Fees

To ensure a secure transaction, hiring a lawyer is recommended. Legal fees range from €250 to €1,000, depending on the complexity of the deal.

4. Translator Services

If you do not speak Spanish, a translator will be required for the notary signing. This service typically costs between €300 and €500. Learn more about accompanying translator services.

Annual Property Taxes

1. Property Tax (IBI)

This tax is collected by the municipality and depends on the cadastral value of the property. The rate ranges from 0.4% to 1.1% of the cadastral value.

2. Rental Income Tax

If you rent out your property, rental income is taxed at the following rates:

• 19% for EU/EEA residents.
• 24% for non-residents from other countries.

Example Calculation of Total Purchase Cost

Scenario: Buying a new apartment in Valencia for €300,000.

Expenses:

• VAT (10%): €30,000.
• Stamp Duty (1.5%): €4,500.
• Notary Fees: €1,200.
• Property Registration: €500.
• Legal Fees: €800.

Total additional costs: €37,000.

Total cost: €337,000.

Useful Tips

• Check the tax rates in your region: They can vary significantly. Research in advance.
• Plan for additional costs: Allocate at least 10–15% of the property price for taxes and fees.
• Consult a lawyer: A lawyer will ensure legal security and help calculate the exact tax amounts.
• Keep all documents: Paid tax and fee receipts may be required for future verification.

Conclusion

Taxes are an essential part of buying property in Spain. Understanding all costs will help you avoid unexpected expenses and plan your budget properly.