When buying a property in Spain, no matter if it’s a new property or a resale property, you will have a number of costs and taxes which you will have to pay, in addition to the property price. It is important to take into account all costs when buying a property.
Below is a summary of the different real-estate costs that you will have to pay in Spain.
1. Costs when purchasing a property
- Value Added Tax and Stamp duty
VAT is a national tax applied to new residential properties. These properties should not have been previously occupied. To this day, VAT is 10% on the purchase price.
Stamp duty (Actos Jurídicos Documentados in Spanish) amounts to 1% of the price of the purchase, but varies depending on the region.
Both of these taxes are paid by the buyer, and if any deposit is paid before the signing of the agreement, this deposit will be subject to VAT when paying this deposit.
- Transfer tax
The buyer pays transfer tax when the property has previously been owned. Stamp duty is already included in this tax. The standard rate depends on the community and generally is between 7% and 10% of the sale.
- Notary fees
The use of a notary in order to prepare the deeds (“escrituras públicas”) involves costs. These fees vary depending on the price of the property but are generally 1% of the purchase price.
If you decide to use a lawyer, the fees will generally amount to 1% of the purchase price. The lawyer will help you during the process and will take care of preparing the deed and the translation before the signing. He will also arrange all the required documents to complete the process.
- Registration fees
Once you have found the right home, you will have to register a new property title. To do this, you must register the deed of purchase and sale. The amount is fixed by law and varies depending on the value of the sale.
2. Costs of owning a property in Spain
Of course, there will be costs associated with owning a property in Spain. Some of these will be maintenance costs and some costs in the form of taxes and fees.
- Community charges
Property owners who live in a complex or a residential building that share common areas with other owners have to pay community charges for the upkeep of these areas, and any other services that the community vote for.
- Personal income tax for residents (IRPF)
Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income. Fiscally speaking, if a person lives in Spain more than 183 days a year, he is considered resident, even without the residence certificate.
- Personal income tax for non-residents (IRNR)
Non-residents who own a property in Spain have to pay an annual income tax. This tax varies according to whether the property is rented out or not.
In case you do not rent out your property, you will have to pay 24.75% tax plus 2% of the cadastral value.
Below is an example of how much tax will need to be paid if the cadastral value is 800,000€:
Property value : 800 000€
Taxable base (2%) : 16 000€
Tax (±25%) : 4 000€
However, if you rent out your property, you will have to declare it and pay 24.75% tax on rental income. You will also pay a proportion during the period that the house is not rented out.
- Wealth tax
This tax affects individuals who have their tax residence in Spain and non-residents with property or rights in Spain. The rate ranges from 0.2% to 2.5%.
People whose assets are less than € 700 000 will not have to pay this tax. In addition, each resident will be able to deduct the value of their residence in Spain to a maximum of € 300 000. Depending on their individual circumstances, Spanish residents have more deductions.
- Property Ownership Tax
After buying a property in Spain, whether it is a newly built or a resale property, you are liable to pay Property Tax. Even if you rent out the property, you must declare your property income tax. This tax is paid every year to the local town hall and is calculated on the basis of cadastral valuation (land value + value of the construction). Depending on the communities, this tax can vary between 0.4% and 1.1% of the cadastral value of the property.
- Tax on capital gains
If you sell your main home and make a profit, you will have to pay a tax called Tax on Capital Gains. Most of the time, the property is sold at a higher price than the one you bought it for. In case you sell a primary residence, this gain may be exempt from tax.
This tax is paid by the seller and amounts to 21% for non-residents. A person who buys a property from a non-resident must withhold 3% of the purchase price payable to the tax authorities. For residents, the rate varies from 21% to 27%.
- Using our consultancy and accountancy services
Located in Barcelona, TAS Consultoria is a Spanish consulting and accounting firm specialized in company formation in Spain. Since 1979, TAS Consultoria offers its experience and expertise to advise and support entrepreneurs in handling their business project in the Spanish market. Our legal experts will be at your side in the negotiation of the contract and will be responsible for reviewing the sales contract.