Taxation and costs

WHEN YOU BUY A PROPERTY

Taxation costs when buying a house in SpainThere are legal fees and taxes to pay on the transfer of a property.

In addition, there are fees which have to be paid to the Public Notary and the Land Registry.

MAM Solicitors can help you with all the details, and help you save your hard earned money.

The tax to be paid depends on which type of property is being bought and where it is located (remember that different Spanish Autonomous regions can legislate differently on the applicable tax rates).

The different taxes that are to be paid when you buy a property are as follows. If you need clarification, please don´t hesitate to contact us now.

> On the purchase of new properties:

  • VAT (Value Added Tax), at a fixed rate of 10% of the declared value of the property.
  • A.J.D. (Stamp Duties). This tax is in addition to above VAT above and is calculated at a rate of:
    • 1,5% for properties located in the Valencian & Andalusian Communities.
    • 2% of the declared value for properties located in Murcia Community.

> On resales:

I.T.P. Transfer Tax at a rate of:

  • 8% of the declared value of the property for properties located in Murcia.
  • 8% of the declared value of the property for properties located in Andalucia and with a price of up to 400.000 euros. Higher values are taxed at a higher rate.
  • 10% of the declared value of the property for properties located in the Valencian Community.

**A good rule of thumb to calculate your budget when buying a property is to allow a 15% on top of the asked price. This will cover all taxes and expenses you must pay – even solicitor´s fees.

WHEN YOU HAVE BECOME THE OWNER

As a non-resident owner of a property in Spain you must be aware that you will be obliged to pay certain taxes in this country. These taxes are due in all cases, irrespective of whether the property is used intensively or only occasionally or even if it is kept empty.

Income Tax (I.R.P.F.)

This tax is around 0.15% of the value of the property, and is paid annually, corresponding to the former natural calendar year. So if your property has a cadastral value of 100,000 Euros, then the payable amount would be about 150 Euros each year.

Local tax on real estate (I.B.I.)

This is a direct tax based on the value of the house. In the UK this is known as LOCAL RATES or COUNCIL TAX. In Spain it´s called IBI (and SUMA BILL in the Alicante Area). Each Town Council determines the percentage to be applied to the cadastral value of the property. Every year, the value of the tax is increased by applying the percentage given by Central Government in Madrid, in line with inflation. This is an annual tax and there is the possibility – which we strongly recommend – of setting up a direct debit to your spanish current account.

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