There are a number of costs involved in buying property in Spain, including the property taxes and legal fees. The following is a breakdown of these costs, so you can have a better idea of what to expect when purchasing a Spanish property.
Spanish property taxes
There are various tax considerations when buying property in Spain, including specific taxes you will need to pay when you buy, own or sell a Spanish property.
This is payable by the purchaser where the vendor is considered a developer who pays IVA and / or this is the first time that the property has been sold / transferred.
The VAT rate depends on the type of property being sold as follow;
- Residential properties 10%
- Plots of land 21%
- Commercial premises 21%
Spanish Stamp Duty
This is payable at the rate of 1.2% where VAT is payable
Transfer Tax (Impuesto sobre las Transmisiones Patrimonilaes – ITP)
This is payable if the property is a resale (second transfer). This is paid by the buyer at the rate of between 8 and 10% depending on value and area. This has to be paid to the Spanish Treasury within 30 days of the date of signing the title deed and is needed in order to register the property.
This tax is based on the increase in the value of the land since the last transfer. The rate varies according to where the property is. Technically the vendor pays this although often it is agreed that the buyer will pay this. This is not normally a huge amount.
A Retention fee set at 3% of the value of the property is made when you buy from a person or company that is non-resident in Spain. This is so that the authority can make sure that the seller has paid all their taxes. If the seller has paid their taxes, they can then reclaim that amount, typically in around a year. If the retention is not made then any outstanding amount due to the authorities can be claimed from the buyer.
If the vendor is a private individual and can prove that they are tax resident in Spain or bought the property before 31 December 1986 and no improvements have been made to the property, then the retention may not apply.
Legal costs for buying property in Spain
For straightforward Spanish property purchases, we charge 11% of the purchase price subject to a minimum of £1,500.
There may be additional charges if the property title is found to be defective or any other unexpected additional work is required, however, we will always inform you before carrying out any work that involves any such additional cost.
Need help buying property in Spain?
Our UK-based team of property lawyers are highly experienced in helping clients to buy and sell property in Spain, as well as handling a whole range of related issues, such as advice on Wills and inheritance.
With a thorough understanding of both UK and Spanish law, we can provide clear, reliable legal guidance in plain English, giving you the confidence to deal effectively with property in Spain.