If you’re curious about the taxes involved in buying a house in Spain, it’s essential to understand that various taxes apply. For instance, the Value Added Tax (VAT) amounts to 10% of the property’s registered value. The Tax on Documented Legal Acts (IAJD) is also levied, ranging from 0.5% to 1.5%. When purchasing a resale property, you’ll encounter the Property Transfer Tax (ITP), ranging from 6% to 10%. Apart from taxes, other expenses include notary fees, agency fees, appraisal costs, mortgage opening commissions, and real estate fees.
Taxes to pay when buying a new house
VAT for purchasing a new home
When purchasing a new home in Spain, it is important to consider the Value Added Tax (VAT), which represents 10% of the registered import. This tax is added to the price of the home and must be paid at the time of purchase, being an obligation for the buyer.
Tax on Documented Legal Acts (IAJD) for purchasing a new home
Another relevant tax when buying a new house is the Tax on Documented Legal Acts (AJD), whose percentage varies between 0.5% and 1.5%. This tax applies to the documentation necessary to formalize the home’s sale, such as public deeds and other legal documents.
Taxes to pay when buying a second-hand house
Property Transfer Tax (ITP) for purchasing a second-hand home
When purchasing a second-hand home in Spain, it is important to consider the Property Transfer Tax (ITP). This tax is applied to the purchase of a used house, and its percentage varies between 6% and 10%, depending on the autonomous community in which the transaction is carried out.
- The ITP is a tax that taxes the transfer of real estate ownership and must be paid by the buyer when formalizing the deed of sale before a notary.
- The applicable percentage of the ITP is calculated on the home’s real value, that is, the purchase price or the cadastral value, depending on which is greater.
- It is important to remember that the ITP is a tax transferred to the autonomous communities, so its tax rate may vary depending on the region in which the home is located. It is advisable to inform yourself in advance about the current tax rate in the corresponding autonomous community.
Other expenses associated with the purchase of a home
Notary fees
Notary fees are a mandatory expense when purchasing a home since the notary is responsible for publicly certifying the transaction. Notary fees vary depending on the deed type and the home’s value, so it is important to consider this expense in the purchase budget.
Management expenses
Management expenses are those related to processing the documents necessary to purchase a home. The agency is in charge of carrying out all the administrative procedures and the bureaucratic processes necessary to formalize the purchase operation, so it is an expense to take into account when acquiring a home.
Home Appraisal
The home appraisal is a necessary expense to determine the real value of the property and to be able to apply for a mortgage. The appraisal is carried out by an independent professional who evaluates the home’s market price, which allows the bank to know the property’s value as mortgage collateral.
Mortgage opening fee
The mortgage origination commission is an expense the financial institution charges when granting a mortgage loan. This commission is calculated as a percentage of the loan amount and covers the administrative and study expenses of opening the mortgage.
Real estate fees
Real estate fees are the fees charged by the real estate agency as an intermediary in selling and purchasing a home. These fees are usually established as a percentage of the home’s sale price and are paid by the seller, although sometimes they can be shared between the buyer and seller.
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