Property taxes in Spain

Let’s talk about all the purchase costs a buyer needs to pay when buying an apartment, townhouse or villa in Spain.

Any property prices that you see – whether it be in a brochure, the internet or anywhere else – are all net prices to the vendor. The purchase taxes and costs must be calculated on top of the agreed price with the vendor.

The main difference lies in buying a brand-new property from a developer or a secondhand property.

Properties bought from developers are subject to VAT (10%) and stamp duty (1.2%) on top of the purchase price. The VAT must be paid on the day of the notary signing.

Secondhand properties are subject only to transfer tax (7%). Then it might increase, or it might not. The transfer tax can be paid up to 30 days after the notary signing.

 We can already see a big difference in taxes if buying from a developer or from a private individual.

It’s important to clarify that private individuals can sometimes be registered as developers and sell a home under VAT. The key to knowing if the property is subject to VAT is if it’s brand new or completely reformed. If nobody lived in it, the owner is registered as a developer.

Lastly, we would like to add a further note about purchasing a Spanish company that owns a single asset, the property. It is a common mistake to assume that if the purchase is made of the stocks of the company, transfer taxes are not applied. When buying stocks of a Spanish company, taxes are applied, or sometimes even none, but always when it’s an active company doing business. The law says that if you are buying a company that only owns one asset, a property, and has no real business activity or employees, such a transaction is likened to purchasing the property itself, and therefore the same taxes as buying a property must be applied.

Other costs apply when buying a property in Spain

This costs are the same for both new or secondhand properties, and are:

Lawyer fees of buying a property

Lawyer fees are 1% (+VAT) for a straightforward deal from the purchase price. Some law firms have closed fees not depending on the purchase price. Sometimes clients prefer not to use lawyers to reduce the cost of acquiring a property in Spain, as it is not obligatory to use a lawyer. We recommend using a lawyer. A good lawyer not only does the transaction but an extensive due diligence prior to the purchase along with an essential after-sale service.

Notary and registry fees to purchase a property

This depends on numerous factors and is usually approximately calculated, only providing a final invoice after the sale. We would estimate 0.25% for both from the asking price to be on the safe side.

Bank account fees when buying a property

This is for transferring the funds to the vendor or issuing banker’s drafts. Almost all purchases through the notary happen with banker’s drafts, not transfers, and for issuing these checks or making an important transfer, the banks charge a commission. These can vary a lot, depending on the amount of payment, which bank you are using. Perhaps something to keep in mind when opening a bank account in Spain.

Mortgage fees to buy a house

If you decide to buy a property in Spain using bank financing, your only cost will be the property valuation. This varies from +500€ depending on the size and price valuation. The rest of the costs and taxes are paid by the bank.

Technical due diligence to purchase a property

Not obligatory at all, but good to keep in mind when acquiring a secondhand property: that is, to check the current state of installations like air conditioning, heating system, and other details in the property. The cost may be from +300€ depending on the size of the property.

Some frequently asked questions

What fees do you pay when buying a property in Spain?
Apart from all the taxes and costs described in this article, there are no more fees to be paid by the buyer when purchasing real estate in  Spain. The vendor pays the real estate fees, together with various other taxes and costs that the vendor must pay when selling his property. It is also important to note that the taxes, costs, and fees can vary depending on which location in Spain you have decided to purchase the property.

What are the pitfalls of buying a property in Spain?

  • Not correctly calculating the costs and taxes of buying a property; in that regard, we hope this blog will serve you well.
  • Not doing the necessary paperwork in advance to authorise the fund transfers for the purchase, and opening of Spanish bank accounts can result in a longer period than might be expected. Thus potentially missing out on the property opportunity due to not being able to act quickly with payment.
  • Not using a professional lawyer. In Spain, the figure of the lawyer in a transaction is crucial in the purchase process. His responsibilities are to make the full legal and urbanistic due diligence before the payments. As well as the Preparation of all contracts for the purchase, and a very extensive after-sale, including control of the taxes to be paid on a yearly basis as a new owner.
  • Not investigating in advance all the taxes you must pay as the future owner of the property.
  • And, of course, not using the right real estate agent.

Do I pay tax when buying a property in Spain?
Yes, when buying any property in Spain, you are obliged by law to pay certain taxes and costs to fulfil the purchase. Not paying the taxes can cause severe problems and sanctions by the tax office. Depending on where in Spain you want to make the purchase, taxes can vary.

What are the rules for buying property in Spain?
When buying a property in Spain, no specific restrictions or rules apply; it doesn’t matter if you are a non-resident or a resident. It IS however essential to obtain an NIE number, open a bank account in a Spanish bank, and give special attention to the legal and fiscal due diligence in advance.