Once you have decided to purchase a property in Spain, it is important to budget for all of the costs associated with the transaction, including the taxes.
If you are buying a second-hand property, you will pay what is known as ITP (Impuestos de Transmisiones Patrimoniales) and has been in existence since 1993. This tax is paid to the Spanish tax office (Hacienda) when the purchase of the property takes place.
Who pays what tax.
It is a direct tax which is payable by the purchaser and it varies depending on the region in Spain where you are buying. Spain is made up of 17 autonomous regions, each with different taxes. For example, ITP in Andalucia is between 8 & 10% depending on the purchase price, Murcia is 8%, Valencia is 10% and the Canary Islands is 6.5%.
If you buy a brand new property, you will pay IVA (the equivalent of VAT). In mainland Spain and the Balearics, this is 10% and stamp duty is 1.5%. This may be different in the Canary Islands. For more info see the Buying Off-Plan webinar we took part in.
Other fees to consider.
Clients also need to budget for other purchase costs such as notary fees, land registry, searches, bank arrangement fee etc. In total costs are around 13% in total on top of the purchase price.
If you are going to purchase a property in Spain and need assistance with a Spanish mortgage, please get in touch with us. Our initial consultation is free of charge, we would be delighted to discuss your options further.
Always make sure your mortgage broker is regulated by The Bank of Spain.
Until next time, enjoy the run up to the Holidays!
The Team at Mortgage Matters Spain.