SPANISH TAX: BUYING PROPERTY IN SPAIN

IVA (VAT)

The sale tax on a propertyis 7 % on the price of the property, but can be 16% if you buy from a promoter or property company. This tax is applicable for new properties.

ITP (Impuesto de Transmisiones Patrimoniales)

The transfer tax is 7% on the price of purchase and is applied if you’re buying property in Spain from a private person.

For second hand properties. This Spanish tax has to be paid in all the situations where the IVA (VAT) tax is not applicable.

These taxes are calculated on the value declared in the public title deed (escritura pública)

Notary Fees and Property Registration Fees

Notary Fees (honorarios de notario): Notary fees are paid normally by the buyer of the property. These fees are fixed on official scales, depending on the size of the property.

The notary will draw up the need and will check that the contract, documents and licences are in accordance with the Law in Spain when buyer and seller sign the Purchase Contract (Contrato de Compra-Venta).

Property Registry Fees: (Registro de la Propiedad): When you’re buying property in Spain, you have to pay the registration of the deed at the Spanish Property Registry. Then the property can be transferred to you. Before going to the registry, you should pay the corresponding taxes, and give to the Register the receipts of the taxes paid in order to be allowed to make the registration.

Who is responsible for paying the taxes in the process of buying property in Spain?

• The buyer pays: IVA or ITP, Notary fees and Property Registration fees.
• The seller pays: Capital Gains tax and Plusvalia.

Necessary documentation to pay taxes when buying property in Spain: To pay these taxes you have to get the Spanish Identification number, NIE (mumero de identificación extranjero) and the Fiscal Number NIF (numero de identificación fiscal).

PLUSVALIA
This tax is charged on the increase of the value of the land (not the building)since the last time the property was sold.

Normally you don’t have to pay this tax when you’re buying property in Spain, this is normally paid by the seller, but it could be paid by the buyer if both parts agree in the purchase contract this option.

IBI – Impuesto de bienes inmuebles.

IBI s a local property tax, payable every year by the owners of the property, residents and non-residents, to the Town Hall where the property is registered.

The local property tax is based on the property catastral value (valor catastral), which is the official value of your property, with a lower value than the property real market price.

The IBI tax rate depends on the size of the city or village where you’ve found your property and is revised every 10 years.

Municipal Governments normally allow the payment to be made by direct debit to a bank account, which makes it easy for the taxpayer to pay the tax before the deadline and thus avoid surcharges.