Property Purchase Tax in Spain

How much does it cost to buy a house in Spain? If you want to become a  homeowner in Spain, you should be prepared to afford between 8% and 11.5% in taxes and related costs.

The exact percentage depends on the type of property and its location. Let’s take a closer look at how it works.

The real cost of buying property in Spain

When buying property in Spain, you must consider not only the purchase price but also additional expenses that can add between 8% and 11.5% to the total cost.

Some taxes are calculated not on the sale price but on the "reference value" established by the authorities, whenever this value is higher. These costs include taxes, notary fees, registry charges, and other administrative procedures. Below, we break down the main expenses you will face.

Notary fees

The notary plays a fundamental role in the property buying process in Spain.

Notary fees usually range from 0.1% to 0.5% of the property price, depending on the notary and the complexity of the transaction. This is one of the most significant costs, as notarization is mandatory in property transfers.

Land Registry fees

Registering the property officially in your name is essential and also involves fees ranging approximately between €300 and €700, depending on location and property price.

Taxes when buying property in Spain

All property purchases are subject to taxes, mainly differing if the property is new or second-hand.

Taxes when buying a new property

If purchasing a new build, you must pay VAT (Impuesto sobre el Valor Añadido or IVA) at a general rate of 10%. Reduced rates of 4% apply to social housing.

VAT also applies to related elements such as garages and storage rooms, provided they are sold with the property and up to two parking spaces.

Additionally, the Documentary Transfer Tax (AJD) ranges from 0.5% to 1.5% of the purchase price, depending on the Autonomous Community. This tax covers notarization of documents.

If you take out a mortgage, the bank pays the AJD related to the mortgage loan, but you are responsible for the AJD on the property purchase itself.

Taxes when buying a second-hand home

For second-hand properties, the Transfer Tax (ITP) is the main tax, varying from 6% to 13% depending on the region.

AJD generally does not apply in these cases unless there are additional deed formalities or a mortgage is constituted.

Example of total purchase costs (new vs. second-hand)

For instance, buying a property worth €300,000, the taxes and fees could roughly be:

*Note: Percentages and fees vary by region and transaction specifics.

Are there special taxes for foreigners?

There are no special or additional taxes for foreign buyers. However, you must be aware of income tax obligations as a non-resident owner in Spain.

• Residents of the EU, Norway, and Iceland pay 19% on Spanish income, including rental earnings, and can deduct related expenses.
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• Non-residents pay 24% on income and cannot deduct expenses.

If the property is vacant, a "notional rental income" tax applies, calculated between 1.1% and 2% of the cadastral value.

The Wealth Tax applies only to high net worth individuals with assets over €700,000.

Additionally, when a non-resident sells a property in Spain, they will de subject to a 3% withholding tax paid directly to the Spanish tax authority

Tips to optimize your purchase costs

• Check for any age or regional discounts on Transfer Tax (e.g., young buyers or specific communities).
• Consult a tax professional to understand deductions and optimize tax liabilities.
• Keep updated on regional tax changes, as these may affect total costs.
• Factor in all additional fees (notary, registry, mortgage-related taxes) early in your budget.
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Official sources for further information

For more detailed and up-to-date information on property taxes and fiscal obligations in Spain, you can consult the following official websites:

• Spanish Tax Agency (Agencia Tributaria): Comprehensive resource for all tax-related matters including Transfer Tax, VAT, and income tax for residents and non-residents.
• Spanish Ministry of Finance (Ministerio de Hacienda y Función Pública): Official legislation and fiscal policies.

Contact UCI for personalized advice

Buying property in Spain involves many fiscal and legal considerations. At UCI, we help international buyers navigate the complexities with tailored mortgage solutions and expert advice. Contact us to make your investment smooth and successful.