If you are in the process of a buying property in Spain, please note that purchasing property in Spain can entail significant costs – not least government taxes – not only in the purchase but also in the event of the eventual resale. Better to go in with your eyes open, as they say! This summary also explains your annual tax filing obligations.
Transfer Tax.– The purchase of a property in Spain is subject to a Transfer Tax which is payable by the purchaser. The tax rate varies depending on the region of Spain and it is usually between 7-10%. As an example, the tax rates applicable in Andalucía are as follows:
When you purchase a property from a developer, Spanish Property Transfer Tax is not applicable but rather VAT (currently 10% of the purchase price) is payable instead. Additionally, Stamp Duty on documentation associated with the property conveyance is also payable and this property tax rate also varies depending on the region of Spain. This can vary between 0.5% and 1.5% and, for example, in Andalucía it is 1,5% of the purchase price.
Notary fees and land registry fees.– In Spain all property transactions have to be signed before a notary public and then this deed is duly registered at the land registry of the municipality when the property is located. These costs are approximately 0.5% of the purchase price.
Professional fees.- Depending on the value of the property and the complexity of the transaction, these fees are between 0.5% and 1.5% of the purchase price, subject to negotiation between the parties.
Mortgage costs.– If you need Spanish bank finance for the purchase of the property, you will need to be aware that there will be additional notary fees, land registry fees and Stamp Duty. Sadly enough, by adding the bank commissions the total costs would be in the region of 2-3% of the mortgage capital.