The price of a property in Spain comprises not only the cost of the house itself but also several taxes.
The taxes when buying property in Spain are different for residents and non-residents, for primary and secondary real estate, and for different regions and conditions. Before looking for a property for sale in Spain, check all the types of taxes you have to pay. This article aims to explain property tax in Spain so that you can roughly calculate the cost of your future home in sunny Spain.
What property tax in Spain do you need to pay?
When buying real estate in the secondary and primary markets, the number and type of taxes are different. To find out how much property tax you will have to pay in Spain, first decide on the type of your future home. Are you buying a new home from a developer or from the owners on the secondary market?
Basic taxes for primary real estate
There are two main types of taxes for primary real estate – VAT (IVA) and Stamp Duty (AJD). The VAT is 10% of the price that you need to pay for your new home. For instance, if a new villa in Alicante costs €250,000, the IVA will be €25,000. Spanish AJD tax (Actos Juridicos Documentados) is between 0.1-1.5%, and in the example above would be up to €3,750 (1.5%) of the amount of €250,000. Together VAT and Stamp Duty make up 11.5%, which is €28,750 for a €250,000 villa.
Basic taxes for secondary real estate market
For secondary real estate, the main two types of taxes are transfer tax (or ITP in Spanish) and Stamp Duty. The first one directly depends on the region where you want to live. For example, in Madrid the ITP rate is 6%, in La Rioja – 7.5%, in Andalusia and Murcia – 8%. In some regions, such as Catalonia, the transfer tax on resale property is 10%. Find out in advance the ITP paid in the city of your choice. Stamp duty (AJD) depends on whether or not you are a Spanish resident and is between 0.1-1.5%, the same as for a new property.
How much tax do you pay when buying property in Spain if you are a resident or non-resident?
How much tax you pay when buying property in Spain also depends on whether you are a Spanish resident or not. These are the main types of taxes:
- Income Tax. This tax for a non-resident only includes the income you received from the purchased property. If you buy a house for regular rental, you must pay a percentage of the declared rent to the local budget annually. Depending on your citizenship, you have to pay between 19% (for residents of EU countries and the European Economic Area) and 24% (for residents of other countries).
- IBI. Annual property tax varies depending on the region of residence. IBI property tax in Spain is fixed and the same for non-residents and residents. It is paid once a year and is 0.4-1.1 % depending on your region. For example, an apartment worth €100,000 is subject to IBI between €400 and €1,100, depending on the region where it is located.
- Wealth tax. Residents and non-residents must pay a wealth tax on all property over a certain amount. So, for example, in the province of Alicante, this amount is considered to be €600,000, and in Malaga – from €700,000. The tax rate is 0.2-2.5% depending on the amount. The highest rate of 2.5% applies if your property is worth a total of €10.7 million and more.
What if I cannot figure out how much is non-resident property tax in Spain?
If you cannot figure out how much non-resident property taxes your will pay in Spain, you can use the services of a tax consultant or use tax calculators on the internet. If you already know where you want to live, how much your house costs and whether you will rent it out or live in it yourself, then this information will be enough for a quick calculation of the exact amount of taxes in Spain. The services of a tax consultant can be included as part of a package of services from real estate agents or for an additional fee from highly specialized professionals. On average, you can find a good third-party specialist for €150-200.