Taxes when buying a property in Spain
When budgeting to buy your dream home in Spain you should remember to factor in the taxes when buying a property in Spain. Luxury Villa Sales are happy to put clients in touch with expert tax advisors who can usually provide buyers with a range of ethically and legal ways of buying a luxury Marbella property in the most tax efficient manner. Obviously each client has different circumstances and differing aims for their Spanish Property Investment. Your Tax Advisor will be able to advise you on the different ways of purchasing a property including holding the property as an asset in a company.
In summary the approximate costs involved when buying a residential property in the Marbella area should be in the region of 10-11% of the agreed purchase price, slightly higher at around 12% if you are buying a new property due to IVA (VAT), plus 1% for lawyer’s fees.
This guide highlights all of the standard taxes and buying costs on a simple Spanish Property Purchase which make up the 10-12% described above, for information purposes:
Spanish Property Transfer Tax (IPT) or VAT (IVA) and Stamp Duty?
If you are buying a new property from a Developer or Bank you will pay VAT (IVA) and Stamp Duty. If you are buying a resale (used) property from a private individual you will pay Spanish Property Transfer Tax (IPT) or VAT (IVA) and Stamp Duty. Youy only pay one pn these 2 taxes – but not both!
Spanish Property Transfer Tax (IPT)
Applicable if you are buying a resale (used) property from a private individual, this 8-10% tax, which is scaled depending upon the Regional Governments deemed value of the property (the ‘fiscal valuation’) is payable buy the buyer for the purchase of any Real Estate. Real Estate includes plots of land, garages, commercial premises, apartments and villas. The percentage applied is as follows:
- 8% Real Estate up to €400,000 (or €30,000 for garages)
- 9% Real Estate from €400,000 to €700,000 (€30,000 to €50,000 for garages)
- 10% Real Estate over €700,000 (or garages over €50,000)
NB – Different rules apply where the Vendor of the Real Estate is a Property Developer or Property Trader – see VAT (IVA) and Stamp Duty below.
VAT (IVA) and Stamp Duty
The VAT, or IVA as it is called in Spain, and Stamp Duty payable on a Spanish Property Purchase is as follows:
- 10% + 1.5% Apartments, Villas and Garages (which are part of an existing property) for brand new properties purchased from Developers/Promoters or Property Traders
- 21% + 1.5% For the first sale of brand new Commercial property or for the sale of Plots of land from Developers/Promoters or Property Traders.
Marbella conveyancing fees (the fees paid for the Lawyer to handle the purchase of property in Marbella) are usually 1% of the Selling Price. This can differ depending upon the lawyer and the value of the property.
Property Registration and Notary Fees
The Property Registration and Notary Fees depend on the complexity of the deeds and the value of the property. Estimate approximately €3,000.
Plus Valia or the Municipal Added Value Tax
A type of Capital Gains Tax, the Plus Valia is a tax levied by the local town hall based on the increase in the deemed value of the property in between the purchase and sale. This tax is usually paid by the Vendor.
Need more information on the Taxes when buying a property in Spain?
As stated above each purchase is different, and the above details describe a good approximate estimate of the costs involved for a relatively standard low value purchase. For those buying a luxury Marbella property a good Tax Advisor (we can recommend one if you do not have one) will be able to recommend the most effective legal methods of tax planning, potentially significantly lowering the above mentioned 10-12%, to meet your personal investment needs.
Please contact Luxury Villa Sales for more information. You can call us on +34 637 521 657.