Buying a brand new home in Spain can be an exciting endeavour. You may think that when buying a property there are a lot of taxes to keep track of, so this article offers you an easy breakdown.
Firstly, you are subject to two taxes when you buy a new-build property in Spain – VAT (IVA in Spanish), which is currently levied at 10% of the purchase price, and stamp duty (Actos Jurídicos Documentados/AJD in Spanish). This tax is paid by the buyer and the amount varies according to in which autonomous community you purchase property.
If your real estate is not new, you pay neither VAT nor stamp duty but rather transfer tax (Impuesto de Transmisiones Patrimoniales/ITP in Spanish). The amount due depends on the price of the property and is levied on a sliding scale.
- VAT: VAT in Spain is known as IVA, and is one of the taxes you incur when you buy a new home. It is payable when buying previously unoccupied residential or commercial property, or plot of land. VAT is a national tax and is currently levied at 10% of the purchase price of a residential property such as an apartment or villa. This means that if the purchase price is €2,000,000, 10% VAT will be equal to €200,000. For purchases of a commercial property or plot of land, including a stand-alone garage, VAT currently lies at 21%.
- The Canary Islands are an exception, and levy their equivalent indirect tax at slightly lower rates than national VAT. In this region, VAT is known as IGIC, or Impuesto General Indirecto Canario, and equates to 6.5% of the purchase price.
- Stamp duty: Stamp duty (AJD—Impuesto sobre Actos Jurídicos Documentados) must be paid when you purchase a new property, whether it’s a house, an apartment, land or commercial premises. Stamp duty (known as AJD) is around 1% of the price of the purchase. Both VAT and stamp duty are paid by the buyer.
Fees when buying a new property
Buying a house in Spain can be both an exciting and daunting experience for many reasons, especially for expats who are moving abroad and buying property in Spain for the first time. Fees and taxes can vary widely between countries and are likely to be different to where you are from. Don’t forget to factor in these costs and expenses when preparing your budget. A mortgage isn’t the only major expense to consider, and by starting the buying process suitably informed with Breezom, you’ll avoid any unexpected surprises and ensure that everything goes smoothly. So let’s get started!
- Notary fees: Notary expenses are calculated in relation to the purchase price, plus other administrative and paperwork costs. Notary fees are set by the government, and comprise a fixed element, and a variable element that reflects the price of the property and the number of clauses in the deeds. They also charge a small fixed fee for every uncertified copy of the deeds (copia simple) requested by the buyer.
- Notary fees vary greatly per sale, but tend to range from 0.1% to around 0.4% of the property price. The notary will also charge for some other administrative and paperwork costs, as well as VAT at the standard rate (currently 21%). You can expect to pay notary fees on any mortgage deeds as well. Rates may vary over time, so always check the latest tariffs in advance before committing.
- Land Registry: This is the fee you pay to have your title registered in the Land Registry (Registro de la Propiedad). Once again, fees depend on the property purchase price. This fee is paid to the property registrar, and calculated on a sliding scale. You can expect it to be around 0.1% of purchase price for more expensive real estate, or for cheaper properties up to 0.3% of the declared price of the property.
- Gestoría fees: The gestoría is a firm that provides assistance with tax payments, paperwork and dealing with tax administrations. They formalise the deeds of the property and mortgages. Fees vary according to location and services offered, but will usually not exceed €500.
- Banking charges: Bank opening fees for mortgages usually range from 0 to 2% of the mortgage cost. Most banks will oblige clients to also take out products such as home and life insurance, although this isn’t always the case.
- Mortgage costs: This is one of the most major fees when buying a house. Most entities charge a commission at the granting of the mortgage and then you have the option of fixed or floating interest rates. In today’s current economic climate, fixed-rate mortgages are currently a more popular choice. Of course, rates vary depending on the terms and conditions of the financial institution and the client profile.
So there you have it, an easy breakdown of fees and taxes when buying a house. At Breezom, we are on hand to steer you through the process, on your way to finding the Mediterranean home of your dreams in Spain.