What taxes and expenses must I pay when I purchase a real estate property in Spain?

16 Dec What taxes and expenses must I pay when I purchase a real estate property in Spain?

There are two taxes and two expenses that must be paid:

TAXES
A) Transfer tax: In Spanish it is known as Impuesto de Transmisiones Patrimoniales (ITP), and in Andalucía is:

1)        8% for the stretch of the value of the real estate property declared in the contract for private sales under EUR 400,000

2)       9% for the stretch of the value of the real estate property that exceeds the amount of Euros 400,000 and is under EUROS 700,000.

3)      10% for the stretch of the value of the real estate property that exceeds the amount of EUROS 700,000.

The same new rates will apply to garages (except for those annexed to houses with a maximum of two units) for the stretch of the following values:

1)       Under EUR 30,000 (8% tax).

2)      Exceeding the amount of Euros 30,000 and is under EUROS 50,000 (9% tax)

3)      Exceeding the amount of EUROS 50,000 (10% tax)

Only in case you buy a new property from the developer: you do not pay Transfer tax (ITP) but you pay IVA (Value Added Tax) which is nowadays 8% of the declared purchase’s price and in addition to IVA you pay a Stamp duty Tax of 1.5% (applicable in Andalucía as well).

B) Plusvalía Tax: it is a municipal tax also known in Spanish as Arbitrio Municipal sobre el Incremento del Valor de los Terrenos, but people prefer to call it Plusvalía for short. Its amount can vary and it is based on the increase in the value of the land where the property is located calculated from the date the last sale took place. Therefore it is a seller’s tax, and you must be aware of this since there is a widely spread customary formula by means of which the sellers make that the buyers agree to pay this tax, and once agreed, the buyers cannot claim any reimbursement. In order to know the exact amount that corresponds to any purchase’s plusvalía tax, you can simply ask it at the municipal tax office in your town.

EXPENSES
– Notary fees. These are fixed fees based on an official scale.
– Property Registry fees: also fixed fees based on an official scale.

(updated on September 2012)