As a general rule, buyers should set aside an extra 10-15% on top of the agreed sale price to pay for taxes arising from the sale.
When a property is sold in Spain, the buyer pays most of the taxes and costs. These can be divided into: taxes due to your local Town Council (Ayuntamiento) and the Spanish Tax Agency (Hacienda).
Municipal tax on the increase in the value of land (Plusvalía)
By law, vendors are required to pay this tax but, if both parties agree, buyers can accept to pay it on the vendor’s behalf. Some vendors try to insist buyers pay, but there is no obligation to do so. If the buyer is getting a particularly good deal, he or she may choose to pay but, in general, we do not recommend clients do this.
The amount due depends on the cadastral value of the land at the time of sale and the length of the vendor’s ownership. The taxable base is calculated as a percentage of the cadastral value, varying from 3% to 3.7%. The tax rate varies from municipality to municipality and is set by the local Town Council, subject a maximum rate of 30%.
Taxes on resale property
If you buy a previously occupied property from a private individual, you are required to pay Transfer Tax (Impuesto de Transmisiones Patrimoniales) to the Spanish Tax Agency, levied on a sliding scale, depending on the sale price:
- 8% up to 400,000€
- 9% from 400,000.01 to 700,000€
- 10% over 700,000.01€
Parking spaces (when sold separately from a dwelling or, if sold together, when more than two spaces are sold at the same time) are taxed in line with a separate scale:
- 8% up to 30,000€
- 9% from 30,000.01 to 50,000€
- 10% over 50,000.01€
Joint owners can benefit from a potential discount because, although the same rates of tax apply, the taxable base of the purchase price is calculated in proportion to ownership.
For a property costing 750,000€, the amount of Transfer Tax due is as follows:
- 8% of the first 400,000€ = 32,000€
- 9% of the next 300,000 € (from 400,000.01 € to 700,000 €) = 27,000€
- 10% of the remaining 50,000 € (from 700.000.01 to 750,000€) = 5,000€
Joint purchasers (for example, a couple who each buy 50% of the property):
- Owner 1: 8% of 375,000€ = 30,000€
- Owner 2: 8% of 375,000€ = 30,000€
Taxes on new property
If you buy a residential property that has never been occupied and is being sold for the first time, you are required to pay value-added tax (Impuesto de Valor Añadido, IVA) at a rate of 10% of the sale price. In addition, you have to pay Stamp Duty (Impuesto sobre Actos Jurídicos Documentados, AJD), at a rate of 1.5% of the sale price, making a total of 11.5%.
Taxes on plots and commercial property
If you buy a plot of land or commercial property, you are required to pay value-added tax at a rate of 21% of the sale price. In addition, you have to pay Stamp Duty, at a rate of 1.5% of the sale price, making a total to 22.5%.
If you buy either a resale or new property in Spain with a mortgage, you are required to pay Stamp Duty, at a rate of 1.5%, on the principal loan, together with any costs and interest levied in the case of non-payment.
If you buy a resale property from a non-resident seller, you are required to retain 3% of the agreed price and deposit the sum with the Spanish Tax Agency within one calendar month of the date of signature of the public title deed. If this is not complied with, the Spanish Tax Agency will hold the property, and the buyer, liable for the retention (i.e. 3% of the agreed price).
All taxes arising from the sale of a property in Spain must be paid within 30 days of the date of signature of the public title deed. If not complied with, buyers will be charged an additional 20% in fines and interest on top of the amount owed.