Taxes and Fees payable – An Overview
Transfer Tax (ITP - Impuesto de Trasmisiones Patrimoniales)
The transfer tax (ITP) of 7% is payable by the buyer on the purchase of a resale or older property (i.e. a property that has not been purchased directly from a developer). The tax is calculated against the purchase price of the property. Where ITP is the applicable tax, it is paid on completion following the signing of the public deed at the Notary Public.
Value Added Tax (IVA - Impuesto sobre Valor Añadido)
Value Added Tax (IVA) of 7% is charged on new residential properties bought directly from a developer, promoter or a person acting as a trader of such properties. The tax is calculated against the purchase price of the property. Where IVA is the applicable tax, it becomes payable as soon as any funds are paid to the seller. In other words, if you are required to pay 30% deposit to the developer to secure your property, the IVA amount must be added and paid at the same time. A percentage of 16% IVA is charged for plots and commercial premises bought directly from a developer.
Stamp Duty
Stamp Duty of 1% is only payable on new properties bought directly from a developer, promoter or a person acting as a trader of such properties. Stamp Duty is paid on completion following the signing of the public deed at the Notary Public.
Plus Valía Tax
Plus Valía Tax is a municipal tax normally payable by the seller. It relates to the official increase in value of the property since the last change of registered ownership. The amount varies depending upon the area in which your property is located and the level of tax applied in that area. Under Spanish law the seller is liable to pay the Plus Valía tax but this can be negotiated as part of the Purchase Contract.
Lawyer Fees
Lawyers’ fees range from 1% to 2% of the purchase price. It is important to remember that the work involved in the conveyance of a property does not necessarily increase with its value and you may want to obtain quotes from different lawyers to compare. Although most lawyers will charge a fixed percentage of the purchase price for their services, some will charge you by the hour, in which case you should request an estimate of the hours the lawyer is likely to spend. All contracts and other legal documents are in Spanish, for which your lawyer may or may not offer translation services. Be aware that you may incur extra costs for these translations.
Notary and Property Registry Fees
Notary fees are set by the government according to the number of clauses in the deeds and the declared value of the property. As an approximate guide they range from 0.1% of the declared price of a property (for properties of 400,000 € or more) to around 0.4% (for properties of under 100,000 €). If you use a mortgage then you will have to pay notary fees on the mortgage deeds as well. Property Registry fees are calculated at approximately 65% - 70% of the notary fees. As a guide you should budget 1% of the purchase price to cover both fees.
Mortgages and Mortgage Costs
Most banks charge a set up fee of approximately 1% of the value of the mortgage. As the Mortgage Deed is signed at the notary, you will have to pay notary fees on the mortgage deeds as well.
IBI Tax
The IBI tax is a public real estate tax which all property owners in Spain must pay on an annual basis. The tax is calculated on the cadastral value, an amount established by the local government, according to criteria which will include the size and type of your property.
Imputed Income Tax for Non-Residents
Non-residents owning real estate in Spain are liable to Non-Resident Income Tax (IRNR - Impuesto sobre la Renta de No Residentes). Under IRNR, a non-resident is liable for any income deriving from the rental or other exploitation of a property. If the property is not exploited, IRNR attributes income to the non-resident, thus accruing a tax liability as a result of this imputed income. The imputed income generated by a non-resident owning a property is approximately 1% to 2% of the cadastral value, depending on the last revision of the cadastral value. The tax amount payable is calculated by applying the general tax rate (24%) to the actual and/or imputed income.
Important Note:
The information provided here is for general guidance only, taxes and fees are subject to change. Always consult an independent lawyer.
General Information - Do your Research
General Information - Consider the Financing
General Information - Legal Considerations
Property Purchase Process- An Overview
Taxes and Fees payable – An Overview