If you are interested in buying a property in Spain, there are various costs you need to be aware of. This section will give you a clear overview of what you need to know about the Spanish fiscal system.
Any person who has the intention of purchasing property in Spain is subject to two types of taxes:
a) Transfer tax or the wealth transfer tax, is a cost paid to the tax office
Example: You are purchasing an apartment for a €100.000 and you are above the age of 32. The apartment itself costs €100.000, however due to the transfer tax you will have to add another 10% to the value. The final price, excluding the costs of a notary and registration taxes, will be €110.000 for acquiring an apartment.
Home purchases for families with 3 or more children. The house must become the principal residence and the total income obtained by the family can not exceed the legal limits (€35.000 approximately)
Home purchases for young people (maximum 32 years old). The house must become the principal residence and the total income obtained by the buyer cannot exceed the legal limits (€35.000 approximately)
Registration taxes are mandatory costs that an investor must pay if he wants to acquire an apartment. These taxes are paid to various authorities within the Spanish system. At times, this process can seem difficult to manage. Therefore you can get a full package with a notary, who then will distribute your money to the appropriate authorities.
The registration taxes normally accumulate to an amount between €1000 – €2000.
When the property is bought by a company or from a business person, then it is required to pay VAT of your investment. The VAT is a set at a general rate of 21%.
Example: If you purchase a property for €100.000 then the final price, excluding the notary and registration taxes, with VAT will be €121.000.
First transmission of new properties sold by the developer company (and it has not been used for a period of time longer than 2 years) is subject to VAT. (Impuesto Valor Añadido)
If a company purchases a real state to restore it, then the transmission is also subject to VAT, if the seller is a company.