27 Mar, 2014 @ 21:57
2 mins read

Caveat Emptor, part 2: A short guide to buying a home in Spain

property taxes spain

IN my last column, we looked, briefly, at what to take into account before purchasing a property in Spain. Now, here’s an overview of the expenses that will be coming out of your account to pay for your new home.

Aside from the, rather obvious, requirement of having the money, or the mortgage, that will be needed to pay the agreed price of your dream home in Spain, you should also set aside approximately an additional 15% of the sum to cover all the other costs for which you, the buyer, are liable when purchasing a property.

These can be divided up into three categories: fees paid to professionals; fees due to the Property Registry (Registro de la Propiedad); and taxes due to municipal and central governments.

Spanish lawyers normally charge 1%, plus VAT, of the agreed price for their services, which should include all the items listed previously: verifying ownership and description details in the Property Registry and the state property database for tax purposes (Catastro), confirming there are no impediments, taxes, or other liens that would affect the sale, checking the town hall has no planning issues or charges pending, drawing up deposit and purchase contracts (if required), and generally protecting your interests as the purchasing party.

For their services in drawing up and overseeing the signature of the public title deed (escritura) and payment, the notary usually charges around 0.2% of the agreed price. Thereafter, the cost of registering your purchase and transfer of ownership in the property with the Property Registry should be about two-thirds of the notary’s fee.

All taxes arising from a property purchase in Spain must be paid within 30 days from the date of signature of the public title deed. After this, buyers become liable for a surcharge of up to 20% of the tax in question. And, remember, prior to paying tax, foreign buyers need to obtain a NIE number (Número de Identidad de Extranjero), the foreign identification number required for all paperwork with the Revenue Service (Hacienda).

For resale properties, buyers must pay Transfer Tax (Impuesto de Transmisiones Patrimoniales), levied in line with a sliding scale, depending on the purchase price: 8% on amounts up to 400,000€; 9% from 400-700,000€; and 10% for amounts over 700,000€. A separate scale applies for parking spaces: 8% up to 30,000€; 9% between 30-50,000€; 10% from 50,000€ onwards.

For new properties, buyers need to pay, (i) 10% value-added tax (VAT, known in Spanish as IVA or the Impuesto de Valor Añadido) on top of the purchase price, and, (ii) 1.5% stamp duty (Actos Jurídicos Documentados).

Whether you’re buying a new or a resale property, if you are taking out a mortgage, you will also have to pay 1.5% stamp duty of the principal loan, plus interests and costs in case of non-payment.

If you are buying from a non-resident, you should retain 3% of the agreed price and deposit this with the Revenue Service with a period of one calendar after completion.

Finally, depending on the terms of the contract agreed between buyer and seller, as the buyer, you may also be liable for municipal land tax (plusvalía), as explained in the previous column. Once you’ve paid all the above, the home of your dreams will, at long last, be yours!

Adam Neale (Columnist)

Adam Neale is the owner of Terra Meridiana, a real estate agency based in Estepona on the Costa del Sol covering areas such as Marbella, Estepona, Sotogrande and Benahavís. Adam has more than a decade of experience in the sales and rental markets and, as Property Insider for the Olive Press, will be providing useful advice for buyers, sellers, tenants and all those interested in living in southern Spain. You can contact Adam by phone at +34 951 318480, pay a visit to his office at 77 Calle Caridad, 29680 Estepona (Málaga) or just visit his website at www.terrameridiana.com


  1. A friend of mine just purchased a flat in Fuengirola and is being asked to pay an extra 30.000 because he “under declared” the value of his flat. This was a flat bought through an estate agent, all handled with lawyers and notaries, and all taxes paid, and yet out of the blue he has been hit with this retrospective bill. Accounts embargoed, fine accrusing interest.

    No one warns you about the real things that can happen with house purchases in Spain. Beware, massively.

  2. Fred, sorry to hear about the dreadful plight you friend has found himself in and as always, through no fault of his own.

    I was watching Question Time on TV last night and the subject of the (UK) property market came up. They talked about the property price bubble, help to buy, foreign investors pouring into London buying off plan properties, the huge demand for property in general, the equally huge lack of housing stock and the desperate need to build more homes. The panel all agreed that hundreds of thousands of new homes must be built to meet the growing demand.

    Could it be more different to the property market in Spain? Spain will be lucky to have an economy/property market as good as the UK has today in 10 years’ time and even that is highly unlikely.

    Of course it could all have been so very different if they had not been victims of their own stupidity. Two key factors are holding back the property market in Spain and the expansion of the residential tourist industry. Firstly, the Junta de Andalucia and their reign of terror which consists of unworkable property laws, revoking building licences, demolishing houses, total ineptitude and very little else. Secondly, the punative tax system i.e. asset declaration for residents, high rates of income tax and the huge purchase taxes when buying and selling property.

    They should look to the UK and learn something. It never pays to tax people to death and unworkable property laws/demolitions will kill any property market stone dead.
    They could change all the above tomorrow, call an amnesty and it would have an immediate impact but the longer they leave it, the more people will vote with their feet and go somewhere more user friendly. They need to get their act together and fast.

  3. @ Fred

    Happened to two friends of ours. Both had different lawyers and were eventually asked to pay a fraction of the original under-declaration.

    Trouble I believe is you buy at market value but the houses are still registered at pre-crash value.

    Anyway seems dead easy to get out of this. Costs in legal fees but gets reduced to hundreds not thousands.

    Of course the council will try it on and see if anyone falls for it.

  4. @Bluemoon, yes it’s very commonplace, but unfortunately not always not so easy to get out of. In this case Hacienda wants that money as a lump sum and all the owners accounts are embargoed until it is paid. No appeal possible so he tells me. They treat first time buyers so lovely in Spain.

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