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What taxes will you pay in Spain?

Buying property in Spain involves various costs, including not only the price of the apartment or house itself, but also a range of fees and taxes necessary to complete the transaction. It's important to know what taxes you'll have to pay when purchasing a property to help you budget accordingly. Here are the most important taxes that apply to property buyers:

1.

Property Transfer Tax (ITP) If you buy a used property (e.g., from the resale market), you will be required to pay ITP, or property transfer tax. The amount of this tax depends on the region where the property is located, as rates vary by Spanish autonomous community. Typically, the tax is: • 6% to 10% of the property value, depending on the autonomous community. For example, in Madrid, the rate is 6%, in Catalonia – 10%, and in Andalusia – 8%.

2.

VAT (IVA – Impuesto sobre el Valor Añadido) If you are purchasing a property on the primary market, i.e., from a developer, VAT applies, not ITP. The VAT rate is 10% for residential properties (new apartments and houses). However, if you are purchasing commercial property (e.g., commercial premises), the VAT rate is 21%. Important: VAT does not apply to the purchase of a property on the secondary market (used).

3.

Notary Tax and Registration Fees After signing the sales contract before a notary, you must pay notary fees. Notary fees depend on the property value and can range from 0.1% to 0.5% of the transaction value. In addition, the property must be registered with the Real Estate Registry (Registro de la Propiedad), which incurs registration fees. These fees can range from 0.1% to 0.3% of the property value.

4.

Legal Document Tax (AJD) This is a tax on legal documents, payable upon signing a contract before a notary. The rate of this tax ranges from 0.5% to 1.5% of the property's value and depends on the region where the property is registered. This fee is payable to the state or local authorities.

5.

Property insurance. Although not a mandatory tax, in many cases banks require new property owners to insure their purchased property. The cost of insurance depends on the property's value and the scope of coverage, but typically ranges from €200 to €400 per year. Financing costs. If you decide to take out a mortgage, you will also incur costs related to the loan process, such as: • Property valuation fee – Banks require the property to be valued by a property appraiser, which incurs costs (around €200-500). • Bank administrative fees – Various banks may charge fees for processing loan applications.

Summary

In summary, when purchasing real estate in Spain, you'll be required to pay a range of taxes and fees, which can range from a few to a dozen or so percent of the property's value. Depending on whether you're buying a property on the primary or secondary market, taxes will vary. Before deciding to purchase a property, it's advisable to consult a tax or legal advisor who can help you understand the exact costs involved and assist you with all the formalities. If you'd like to learn more about the process of buying real estate in Spain or need help choosing the best deal, contact our real estate agency – we'll help you every step of the way!