Spanish taxes and fees for property owners
Types of taxes
Spain has a series of expenses associated buying a home, which are paid only once and which usually represent 10 to 12% of the property value. Once the buyer has become an owner, they will be subject to a series of taxes and annual fees on their home.
The following expenses apply to the owners of a property in Spain at the time they buy a property:
1. Value-Added Tax [VAT] (Impuesto sobre Valor Añadido [IVA])
This tax is applied only to new homes and is currently 10% of the purchase value, except in the Canary Islands where they are governed by the IGIC, which charges 7% of the purchase value.
2. Transfer and Stamp Tax (Actos Jurídicos Documentados [AJD])
In addition to the VAT, new homes must also pay the AJD, an autonomous tax that varies between 0.5 and 1.5% of the purchase value. Each autonomous community sets its percentage on this tax, so the amount to be paid will vary from one community to the next. The AJD, like the VAT, is only paid at the time of acquiring the property.
3. Property Transfer Tax (Impuesto de Transmisiones Patrimoniales [ITP])
Second-hand homes are exempt from the VAT, but are taxed by the ITP.
This tax rate varies between 6 and 10% of the deed value and is set by the autonomous communities. The ITP is only charged when registering the home.
4. Capital Gains Tax on Urban Land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana [IIVTNU])
This tax usually falls upon the seller of a property, since it taxes the amount urban land has appreciated in value during the time which the seller owned the property. It is however possible to reach an agreement where the buyer will assume these costs or where the amount is divided between the buyer and the seller. The tax is usually 3% and is set by local government. As with the previous taxes, this is only paid once, when acquiring the property.
5. Notary Fees (Notaría)
Notaries in Spain charge a fixed fee for granting public deeds, varying the cost based on the value of the property to be deeded. This expense is typically 0.5% of the property value.
6. Registry (Registro)
Public deeds must be registered in the Property Registry (Registro de Propiedad). The cost of this registration varies according to the value of the property, usually not exceeding 0.3% of the property value.
7. Administration (Gestoría)
Administrator costs only apply when a mortgage is being used to pay for the property, since all of the necessary paperwork for tax calculations, the mortgage application, and the property registration will be the responsibility of the bank. As a guide, this can cost around 250 euros in professional fees. To this appraisal fees must be added (which usually do not exceed 400 euros), the bank’s mortgage opening fee (between 0 – 2% of the borrowed capital), and the AJD (Transfer and Stamp Tax) on the value of the mortgage.
Fees and taxes for a new €200,000 property
1. Income Tax (IRPF o IRNR)
In the case of foreign owners residing in Spain, the IRPF (Impuesto sobre la Renta de las Personas Físicas) must be filed annually. Foreign owners not residing in Spain must file the IRNR (Impuesto sobre la Renta de No Residentes) annually.
2. Property Tax (Impuesto de Bienes Inmuebles [IBI])
This is a local tax collected by the local government annually. It is calculated by applying the established tax rate (between 0.4 and 1.3%) to the property’s assessed value.
3. Wealth Tax (Impuesto sobre el Patrimonio)
This tax comes and goes with legislative bodies, so it is advisable to not forget about it. Individuals who have their habitual residence in Spanish territory or that, if not habitual residents, are residents of an EU (European Union) or EEA (European Economic Area) member country with assets in Spain worth more than 2,000,000 euros must declare this tax annually. The fee is to be paid in installments once the minimum exemption, as established by each autonomous community, has been deducted.
4. Local Government Taxes (Tasas del ayuntamiento)
Here are generally included the garbage collection, sewer, and lighting fees. These are local taxes that are paid annually, varying significantly from one area to another.