Property purchase taxes
When you invest in the purchase of a property, you have to add expenses and taxes. Regarding the applicable taxes, they will be different depending on whether the property is new or used.
It is generally considered that, between expenses and taxes, the buyer must add to the investment between 10% and 15% of the total. This value is approximate and will vary depending on the region of the property, among others.
So who pays the expenses and taxes in real estate transactions?
It must be taken into account that Spanish law regulates who is responsible for paying the expenses and taxes. Although, in some cases it may be agreed differently.
The payment of expenses and taxes is generally divided as follows:
BUYER
Expenses: Notary, Registration of the sale and purchase in the Land Registry, Gestoría, others.
Taxes: Value added tax VAT (Impuesto sobre el Valor Añadido IVA) or transfer tax ITP (Impuesto sobre transmisiones patrimoniales). Tax on Documented Legal Acts IAJD (Impuesto sobre actos jurídicos documentados).
SELLER
Expenses: cancellation of mortgage charges and other notary expenses prior to purchase. Real estate commission, sometimes they try to charge it to both parties.
Taxes: Municipal Capital Gains Tax (Plusvalía Municipal).
BANK
If the operation is made through financing (mortgage) the bank will pay: the buyer’s notary fees, the registration of the purchase-sale in the Land Registry and the Tax on Documented Legal Acts (IAJD). In other words, these are included in the mortgage expenses.
New Property Taxes
As mentioned above, the applicable taxes will vary depending on whether you are buying a new or used property.
If the seller is a company (promoter) and a first delivery of the property is made. In this case a reduced VAT of 10% is paid on the amount of the public deed (sale and purchase before a notary). It will also be applied to the parking spaces (maximum 2) or the annexes (e.g. storage room) included in the same operation.
If what is purchased is a new social housing, the VAT to be paid will be at a super-reduced rate, i.e. 4%.
In the case of the purchase of a new commercial property, registered as such, to later make a change of use and convert it into a dwelling, it may be required to pay a general VAT of 21%.
The VAT will be paid directly to the seller, who will then be liable to the Spanish tax authorities, paying the amount himself.
BECOME A CLIENT
Get your first informative appointment, free of charge!
There may be special cases in which the buyer does not have to pay VAT:
- When the property is purchased from a bank, it is considered used housing.
- When the property has been rented for more than two years by the developer who built it, it will be considered used housing.
The Tax on Documented Legal Acts (AJD) must also be paid. This tax is levied on notarial documents in the case of the purchase and sale of real estate. The tax has two quotas, a fixed one and a variable one:
- The fixed fee refers to the stamped paper on which the notarial documents must be drawn up and amounts to 0.30 euros per sheet and 0.15 euros per page.
- The variable fee will depend on the percentage approved by each Autonomous Community and ranges between 0.5 and 2%.
Used Property Taxes
In the case of a used property, no VAT will be paid, but the Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP) will be paid. Like the VAT it is a percentage that oscillates between 6% and 10%, depending on the autonomous community.
The ITP must be paid by the seller within 30 days from the signing of the deed of purchase.
The taxable base for the ITP on real estate transactions is determined from January 2022 by the so-called Market Reference Value, which has been calculated and published by the General Directorate of Cadastre for (practically) all urban properties in the country. Unless the real value of the transfer is higher than this reference value, then the higher value will be used.
When what is bought is a second-hand property, only the fixed quota of the Tax of Documented Legal Acts (AJD) will be paid.
The Gestoria
In Spain the management of the payment of the taxes is normally done by the gestoría. That will be in charge under my supervision of making a provision of funds for the taxes to be paid, before the public sale before a notary. It is a typical Spanish figure and they are also the ones in charge of presenting the documentation before the official registries.
In the case of financing, the bank in most cases will work with its own Gestoria.
Basic Information on Data Protection
Saulgonzalezclaros.com informs you that the personal data provided will be treated by Saul Gonzalez Claros and other collaborators as responsible for this website.
Purpose: to receive communications from saulgonzalezclaros.com at the request of the interested party, once the form has been filled out, an appointment has been requested or contact has been made by another means (e.g. WhatsApp).
Legitimation: By checking the acceptance box, you consent to receive communications from Saúl González Claros. Your data will be treated in accordance with the stipulations of the Legal Notice and the Data Protection Policy.
Recipients: Siteground as internet service provider.
Rights: Access, Rectification, Cancellation, Opposition, Portability, Forgetfulness and Limitation.
All additional information can be found in the Legal Notice and in the Data Protection Policy of saulgonzalezclaros.com.
