It is important to have clear from the outset the real costs you will face when you buy property in Spain. If you underestimate either of these costs you run the risk of getting into financial difficulty. At that point your dream home in the Spanish sun could become a serious problem for you.
There are very few people in the Spanish real estate business that will take the time to explain all the costs you will face. Therefore it is your responsibility to be informed and do your own numbers. To do this you need to know which costs to expect so here we explain all the different types of costs. Bear in mind that the actual cost will depend on your particular circumstances.
Important!
The properties you see here come from a range of estate agencies across Spain. To get more details click 'Request Info' and an email will be sent to the relevant agent.
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The Cost of Buying a Property in Spain
COST ASSOCIATED WITH BUYING PROPERTY IN SPAIN As a buyer of property in Spain there are a number of costs and taxes over and above the property price that you will have to pay. Depending upon whether you are buying a new property from a developer, or a resale property from a private individual, you will either have to pay VAT & Stamp Duty, or a transfer tax. The different cases are explained below, along with the other costs and taxes that are common to both cases. NEW BUILD FROM A DEVELOPERVAT & Stamp Duty (IVA & Actos Jurídicos Documentados - AJD)These taxes apply if the property is being sold for the first time, and the seller is a property developer. The VAT (known as IVA in Spain) is 7% on the price of the purchase in the case of built residential property (villa, apartment, etc), and 16% in the case of plots of land (without built property) and commercial premises. The Stamp duty (known as AJD) is fixed at 1% of the price of the purchase. Both VAT and Stamp Duty are paid by the buyer, and if any deposit is paid before completion of the sale, such deposit will be subject to VAT at the moment of payment of this deposit. In this scenario there is no transfer tax to pay. RESALE FROM A PRIVATE INDIVIDUALTransfer Tax (Impuesto sobre Transmisiones Patrimoniales - ITP)This tax applies if the property is deemed to be a second or posterior transfer. The Transfer Tax is 6% or 7% on the price of the purchase, depending on the Spanish Autonomous Region in which the property is located. The transfer tax is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to the transfer tax. However the full amount of the transfer tax still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax. Income Tax Provision When Buying From Non-residentsIf the seller is not a Spanish resident, the buyer has to withhold 5% of the purchase price and pay it to the tax authorities (application form 211). If this is not done the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.
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