There are several taxes and costs involved when buying a property in Spain, as it makes a difference if you buy a new property from the developer or a resale we will explain both.
New property from a developer:
VAT, (IVA in Spanish), this tax is applicable if the property is sold for the first time by a property developer. VAT is 10% of the purchase price in case it concerns residential property such as apartments, villas, etc and 21% in case it concerns plots of land without a building and commercial premises. Deposits and any other payments made prior to completion are subject to VAT. The buyer pays this tax.
Stamp duty, (AJD in Spanish) is 1,2% of the purchase price. The buyer pays this tax.
Transfer Tax (ITP in Spanish), this tax has to be paid when buying a property that has already been sold before and therefore is not from the developer. The tax depends on the Spanish Autonomous region where the property is located but in general it is 8% of the first € 400.000 of the sales price, 9% over the part between € 400.001 and € 700.000 and 10% for the part of the sales price over € 700.000. This tax is to be paid by the buyer in once and full on completion.
Costs for both resales and new developments:
Legal fees, however you are not obliged to use a lawyer we strongly advise you to hire one. Your lawyer will look after your interests and can explain and guide you through the whole buying process. A lawyer usually charges 1% (plus VAT) of the purchase price.
Mortgage costs, when you want to finance your purchase (partly) with a mortgage on your property in Spain you will come across several extra costs. There is the valuation which your mortgage provider will require before approving the mortgage. This is to be paid for by the buyer and usually costs between € 250 and € 500. Secondly there are the costs of the mortgage itself. They vary by mortgage provider and other financial products you will buy with that same provider but usually there is an opening fee of 1% of the amount of the mortgage. Furthermore taxes will have to be paid plus notary, registration and legal expenses so it usually comes to 2,5% and 3% of the mortgage obtained.
Notary Expenses, these expenses are usually paid for by the buyer and are based upon the purchase price, the number of properties bought and the number of pages of the legal documents. You should take into account about 0,5% of the purchase price.
Plusvalia tax, this is a local tax based on the number of days a plot of land belonging to the property that is sold has been in the possession of the seller. The law states this tax has to be paid by the seller unless otherwise agreed upon. To get an indication of the tax to be paid the documentation has to be studied.