What property taxes do you pay when buying a property in Spain?

Do you want to buy a property and you don't know what are the costs and taxes that apply to property in Spain? Below, Properplan provides you with a list of all the taxes and expenses that you have to face for buying and owning a property in Spain.

Due to the warm climate and low cost of living, Spain attracts many people from abroad who want to spend holidays or retire away from their original country. Also, after the financial crisis of 2008, Spain has attracted many foreign investors who have enjoyed a strong real estate market. Some of these people end up buying properties without much knowledge on the different costs that buying and owning a property in Spain entails. 

Below is a list of the different types of taxes and expenses that must be paid when owning or buying a home.

Taxation of property purchases

Buying a property in Spain does come with many different costs, it is very important to account for these costs before purchasing the property. A good rule of thumb is to always add an extra 10% of the value of the property in acquisition costs.

With that said, below you will find the different list of taxes and costs related to purchasing a property:

VAT (IVA by Spanish acronym) or Property Transfer Tax (ITP by Spanish acronym)

These are the most costly taxes when buying a property in Spain. If the property is of new construction you must pay VAT (IVA) and if it´s second hand property you must pay Transfer Tax (ITP).

VAT (IVA) represents 10% of the value of the property, with the exception of social housing (viviendas de protección oficial) which goes down to 4%. In the Canary Islands the tax on property purchase called IGIC (instead of IVA) is just 7% of the value of the property.

Property Transfer Tax (ITP) cost varies depending on the autonomous community where the property is located and only applies to properties that have been previously owned before. The rate varies between 6% and 10%. Below is a table with the rates for each autonomous community.


Stamp Duty Tax (AJD)

The tax on Documented Legal Acts is levied on the administrative and notarial documents for the signing of the mortgage. This tax varies depending on the Autonomous Community where it is signed, as each territory determines the cost of this tax. The cost is between 0.5% and 2%. 

Notary fees

These are the costs of writing the legal documents (including title deed tax and land registry fees) and are usually between 1-2.5% of the value of the purchase.

Municipal plusvalía tax

A tax based on the increase in land value since the property was last sold. This is usually paid by the vendor but can be negotiated to become the buyer’s responsibility.

Other fees and things to consider

You can also expect to pay around 1-2% (including VAT) of the property value in legal advice. However with Properplan this advice is free!

It’s worth noting that real estate agent’s fees are usually paid by the seller but in some cases the buyer can also be charged.

Currency exchange variability is a cost that can easily be underestimated. The impact that the exchange rate can have on your property purchase can change rapidly due to fluctuating fx rates. It is a risk that you must consider but that could be avoided by already having your budgeted amount in the local currency. 

Understanding which taxes and costs are involved in a property purchase in Spain is part of the buying process. At Properplan, we help you plan and manage the entire home buying process. Get in touch to find out how we can help you buy your dream home in Spain.

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