On this page we would like to inform you about the general regulation concerning costs & taxes of real estate in Spain. Your lawyer or financial advisor will explain all this more detailed, based on your specific case. In general, there are 3 different types of costs;
- Purchase costs
- Yearly costs
- Selling costs
The prices of real estate in Spain are generally excluding charges and taxes. The agency fee is already included, since these are met by the seller.
As a guideline for the purchase costs:
New construction (first owner)
VAT (=IVA) – From January 2013 the VAT in Spain for the purchase of new construction apartments and homes increased to 10% (+ 1.5% stamp duty). The VAT for the purchase of a building plot is 21% (+ 1,5% stamp duty).
Existing real estate in Spain
In the case of existing real estate in Spain you will pay a transfer tax (ITP), and not VAT.
Value until 400.0000 euro — 8% —
Value from 400.000,01 to 700.000 euro — 9% —
Value from 700.000,01 euro and more — 10% —
- Example: property – purchase 600.000 euro:
For the first 400.000 euro (8%) — 32.000 euro —
For the 200.000 euro (9%) — 18.000 euro —
Totaal: — 50.000 euro —
The notary costs are variable, but this fee is documented in an official scale. For example, if there is a mortgage on the property, this will lead to extra costs because of the extra deed.
This is a cost concerning the registration of your property in the official Registro de la Propiedad (property register).
These costs are similar to the notary costs. Together they represent 1% of the total purchase amount.
Usually around 1-1.5% of the purchase price. Your lawyer will clearly explain you all procedures and costs and how they were made.
At the final transfer of the property you will receive copies of all receipts of taxes on the property. Examples of this are:
The annual municipal property taxes (IBI = Impuesto sobre Bienes Inmuebles).
In case of existing construction, the previous owner has to hand over the receipts from previous years to the lawyer.
The basic rate for IBI is a percentage of the cadastral value of the property (0,3-0,9%).
This rate can be adjusted annually by individual municipalities.
For a 2 bedroom-2 bathroom apartment in Estepona, the currently annual average is 400 to 500 euro.
Local municipal tax based on the cadastral value (Valor Vatastral)
The officially taxed value of the property, which serves as a starting point for the calculation of taxes, is listed as the Valor Catastral (this is also mentioned on the annual IBI assessment).
Any cleaning rights (basura) and sewer rights can also be included in this amount, but these are charged separately.
This is an annual cost. For a 2 bedroom-2 bathroom apartment in Estepona, this cost is currently around 160 euro per year.
Taxes concerning the renting or the use of the property
Indicative calculation probable income: Purchase price/2 * 1,1% (to be validated by your lawyer).
Example: Apartment of €300.000
Probable income: €300.000/2 * 1,1%= €1.650
Depending upon the use of the property, this calculation will happen as follows:
- In the case the property is completely for private use, a tax of 19% (for European non-residents in Spain) is counted on the cadastral income (in the example above, €313.50).
- In the case the property is rented a tax of 19% (for European non-residents in Spain) is counted on the effective rental value.
Energy and water costs
Electricity supply is controlled via “Endesa”, the local company. Every apartment has a meter, the stand is measures every month or every two months. Your lawyer will ensure that payments will be completed via direct bank transfer.
The charges for water are organised the same way. Water costs are cheap in Spain and in many urbanizations already included in the service charge.
If you buy a house or an apartment is a complex, you will have to pay a service charge (community fees). These are charged by month or quarterly. These costs cover, among other things, maintenance of buildings, cleaning of communal areas, security, management, gardens, swimming pools and other facilities. The total amount depends on the size of the property and the facilities that are available for the owners.
The wealth tax was re-introduced in 2011 for individuals with a capital of more than €700.000. This is a progressive taxation based on the property value. The rate range is between 0,24% and 3,03% (in Andalucia).
The procedure for the sale of a property is in some sense similar to the purchase process.
In consultation with a good and reliable real estate agent you should in the first place determine the sales price. In this price the commission for the real estate agency is included.
The following costs and taxes are applicable in the case of selling a property (calculated on the net amount that the seller receives):
Retention – 3%
If the seller is a non-resident of Spain, 3% of the declared selling price will have to be paid to the tax office, on the base of all taxes that are owed. This deduction will be calculated together with the capital gains tax. If the capital gains tax is less than the retention tax, you can claim back this difference filling in a tax form (210). Your lawyer or tax advisor will assist you with this.
Capital gains tax – Standard rate 19% (for Europeans non-residents in Spain).
Before the tax assessment, different costs can be deduced, such as, IVA/ITP, notary fees, any home improvement/expansion costs and sales costs.
This is a tax on the increase of value of the ground where the property is built on. The municipality calculates this Plusvalia tax for the owner (seller) and this tax can be different per municipality and location. The market price or selling price of the property has no effect on the value of the Plusvalia tax. Normally, the seller pays this tax. It is important to make clear agreements about this in the sales contract, in consultation with the lawyer.
Normally established around 1% of the sales price.
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