Costs and Taxes When Buying Property in Spain

When buying property in Spain, taxes and total fees typically add between 8% and 12% for resale homes, and 11% to 14% for new-builds. The exact amount depends on the property type, region, and whether a mortgage is involved. These additional costs go beyond the purchase price and are essential for completing the transaction legally and smoothly.

Key Taxes and Fees in Spain

VAT (IVA)
For new properties, a flat 10% VAT is applied, regardless of the purchase price. This rate is consistent throughout Spain, offering simplicity in calculations.

Transfer Tax (ITP)
For pre-owned properties, a tiered tax structure is used. The percentage depends on the property’s value and the region, with rates typically ranging from 6% to 11%.

Stamp Duty (AJD – Actos Jurídicos Documentados)
This tax, payable on new builds, is calculated at a rate between 0.5% and 2%, depending on the region. In the Balearic Islands, the rate is 1.5% for most properties, increasing to 2% on homes priced over €1,000,000.

Notary and Land Registry Costs

The Role of the Notary
In Spain, a notary plays a vital role in property transactions. They are impartial public officials responsible for ensuring that the sale adheres to all legal requirements and safeguards the interests of both the buyer and the seller. Notaries verify that the transaction complies with Spanish law, providing legal assurance throughout the process.

Key responsibilities of the notary include:

• Witnessing the deposit agreement (Contrato de Arras)
• Certifying the final purchase contract (escritura pública)
• Verifying the seller’s legal ownership
• Confirming that taxes such as VAT or ITP are correctly calculated and paid
• Explaining the contract terms to both parties
• Registering the property in the buyer’s name at the land registry

Notary Fees
Notary fees are regulated by law and vary depending on the property’s price. Generally, these fees range from €600 to €2,000. The final amount may depend on the complexity of the transaction and the location. Land registry fees are typically of a similar magnitude.

Legal and Administrative Fees

Hiring a solicitor or gestor is highly recommended to handle paperwork and ensure compliance. Fees usually range between 1% and 2% of the property’s value. For a mid- to high-value transaction, this typically amounts to €5,000–€30,000.

Surveyor and Optional Costs

Surveyor Costs
For buyers requiring a mortgage, a property valuation by a surveyor is mandatory. This service typically costs between €250 and €600, depending on the property’s value and location.

Optional Services
Engaging a gestor to handle tax filings and administrative paperwork can cost around €300. Their responsibilities may include lodging the deeds with the land registry, paying property taxes on your behalf, and assisting with utility connections.

Worked Examples: Buying in Mallorca

Below are two worked examples showing total estimated costs when purchasing a property in the Balearic Islands at €1,500,000.

Example 1: Resale Property (€1,500,000)

• 8% on the first €400,000 = €32,000
• 9% on the next €200,000 (€400,001 to €600,000) = €18,000
• 10% on the next €400,000 (€600,001 to €1,000,000) = €40,000
• 12% on the final €500,000 (€1,000,001 to €1,500,000) = €60,000

Total ITP: €150,000

Additional estimated costs:
Notary and Land Registry Fees: ~€1,500
Legal Fees (1.5%): €22,500
Surveyor (if mortgage required): €500

Total Estimated Costs: €174,500 (11.63% of Purchase Price)

Example 2: New-Build Property (€1,500,000)

• VAT (10%): €150,000
• AJD (2%): €30,000

Total Taxes: €180,000

Additional estimated costs:
Notary and Land Registry Fees: ~€1,500
Legal Fees (1.5%): €22,500
Surveyor (if mortgage required): €500

Total Estimated Costs: €204,500 (13.63% of Purchase Price)

Note: Real estate agency commissions in Spain are typically paid by the seller. Buyers do not incur any additional agent fees beyond the costs listed above.

Other Tax Considerations

Are tax rates the same throughout Spain?
No, tax rates can vary depending on the region. Each autonomous community has the authority to set its own tax rates, so it’s essential to be aware of the specific rates in the area where the property is located.

Do non-residents have different tax obligations?
Yes, non-residents in Spain have certain tax obligations. For example, they are required to pay income tax on rental income earned from the property, even if the property is not actively rented. In addition, non-residents must file an annual non-resident tax return based on a notional rental value.

Can I benefit from any tax incentives or deductions?
There are certain tax incentives and deductions available in Spain, such as deductions for first-time buyers or for properties that include energy-efficient features. These vary by region and situation, so professional advice is recommended.