Understanding the taxes involved when buying or selling property in Spain is crucial for making informed decisions. From property transfer taxes to capital gains tax, there are various costs that need to be considered. This guide will help you navigate the tax landscape, whether you’re a buyer, seller, or property owner in Spain.

                                                                             Property Taxes for Buyers

When purchasing property in Spain, there are several taxes and costs to be aware of, depending on whether you’re buying a new build or a resale property.

• VAT (IVA) for New Properties: For newly built properties, you will need to pay VAT (known as IVA in Spanish), which is typically 10% of the purchase price. This tax is only applicable to new properties from developers.

• Property Transfer Tax (ITP) for Resale Properties: For resale properties, you’ll be subject to Property Transfer Tax, which is based on the purchase price. The rate varies by region, ranging from 6% to 10%. Be sure to check the specific rate for the area where you’re buying.

• Notary and Registration Fees: These fees typically range between 1-2% of the property price. They cover the cost of legal documentation and registering the property in your name.

• Stamp Duty: Certain regions in Spain have a stamp duty tax, which usually ranges between 0.5% and 1.5% of the transaction value.

                                                                              Property Taxes for Sellers

If you are selling property in Spain, there are a few taxes and fees you need to be aware of.

• Capital Gains Tax: If you sell your property for a profit, you will need to pay Capital Gains Tax on the difference between your purchase price and the selling price. For residents, the tax rate typically ranges from 19% to 23%, depending on the gain. Non-residents may face different rates.

• Plusvalía Municipal: This is a local tax on the increase in the value of the land since you bought it. The rate is determined by the local municipality and varies depending on where the property is located.

• Other Selling Costs: In addition to the taxes, you’ll need to account for notary fees and legal services, which can add up to 1-2% of the sale price.

                                                                         Ongoing Property Taxes for Owners

As a property owner in Spain, there are annual taxes and fees that you must pay.

• IBI (Impuesto sobre Bienes Inmuebles): This is an annual property tax that applies to all property owners in Spain. The rate varies depending on the municipality, the size of the property, and the cadastral value. It’s important to check the specific rate in your area.

• Wealth Tax: If your total assets exceed a certain threshold, you may be required to pay wealth tax. The rates depend on the region and the total value of your assets, with exemptions in some cases.

                                                                    Other Tax Considerations for Foreign Buyers

Foreign buyers in Spain should be aware of additional tax obligations.

• Rental Income Tax: If you plan to rent out your property in Spain, you will need to pay tax on the rental income. Non-resident owners are taxed at a flat rate of 24%, while residents are taxed according to their income tax bracket.

• Non-Resident Income Tax: Even if you don’t rent your property, non-resident property owners are required to pay a tax on the value of their Spanish property. This tax is usually around 1.1% of the cadastral value of the property.

The taxes involved in buying, selling, and owning property in Spain can seem complex, but with the right understanding, the process becomes much easier. Whether you’re purchasing a home or selling one, it’s essential to factor in these costs to ensure a smooth transaction.

If you’re planning to buy or sell property in Spain, our team can provide expert guidance to help you navigate the tax landscape and make the best decisions for your investment.