What Taxes and Fees to Expect When Buying Property in Spain
Introduction
Buying property in Spain is an increasingly popular choice for international investors. However, it is a major financial decision that requires rigorous preparation. The most common mistake is to underestimate the overall budget by focusing solely on the advertised sale price.
As experts in the Spanish market, our experience shows that ancillary taxes and fees typically represent between 12% and 14% of the property price. Understanding these costs is crucial for a realistic budget and a secure purchase. Here are the details of the main items to anticipate.
1. Main Taxes: New Build (IVA) vs. Resale (ITP)
The most significant tax will depend on the nature of the property: are you buying a new build from a developer or a resale property (second-hand) from a private seller?
Buying New Build: VAT (IVA) and Tax on Documented Legal Acts (AJD)
If you purchase a new build property, you will pay Spanish VAT, known as IVA (Impuesto sobre el Valor Añadido). The national rate is 10% of the sale price.
In addition to IVA, you will be required to pay the Tax on Documented Legal Acts (AJD). This is a regional tax that varies, but it is typically around 1% to 1.5% of the purchase price.
Buying Resale Property: Property Transfer Tax (ITP)
For a resale property (second-hand), you do not pay IVA but ITP (Impuesto de Transmisiones Patrimoniales). This is a regional tax whose rate varies considerably:
- Valencian Community (Costa Blanca): 10%
- Andalusia (Costa del Sol): 7% (reduced rate)
- Catalonia (Barcelona): 10%
- Madrid: 6%
Important: Unlike IVA+AJD, if you buy a resale property, you only pay ITP.
| Property Type | Main Tax | Rate (Average) |
|---|---|---|
| New Build Property | IVA (VAT) + AJD | ~ 11.5% (10% + 1.5%) |
| Resale Property | ITP (Transfer Tax) | 6% to 10% (depending on the region) |
2. Mandatory and Recommended Service Fees
In addition to taxes, several administrative and legal fees are essential to secure the transaction.
| Service | Status | Estimated Cost |
|---|---|---|
| Notary (Notaría) | Mandatory | 0.5% to 1% of the purchase price (regulated fees) |
| Property Registry (Registro) | Mandatory | €400 to €800 (fixed/regulated fees) |
| Lawyer (Abogado) / Gestoría | Highly Recommended | 1% to 1.5% of the price (or flat fee €1,500 - €3,000) |
3. Bank and Mortgage Fees
If you finance your acquisition with a mortgage (hypoteca) in Spain, additional costs will apply. Spanish law from 2019 protects the borrower, but certain fees remain your responsibility.
Today, the bank pays the majority of mortgage origination fees (Notary, Registry, AJD). However, the buyer must still pay two items: the property valuation fees and any arrangement fees.
- Property valuation (Tasación): Mandatory for the bank. Cost: approximately €300 to €500.
- Arrangement fees (Comisión de Apertura): Increasingly rare, but can amount to 0.5% to 1% of the loan amount.
For official tax information (Authoritativeness), you can consult the Spanish tax administration portal: Agencia Tributaria. However, expert guidance remains essential to navigate this information.
Conclusion
Buying property in Spain requires a total budget significantly higher than the advertised price. For sound financial preparation and to avoid surprises (Trustworthiness), it is crucial to provision between 12% and 14% for additional fees and taxes on top of the purchase price.
Our experience (Experience) confirms this: thorough preparation and professional support (agency, lawyer, tax advisor) are key to successfully realizing your property project and securing your investment.
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FAQ: Spanish Property Purchase Taxes and Fees
Our experts detail the 12% to 14% of hidden costs (ITP, IVA, Notary, Solicitor) to add to your property's sale price.
The most important rule is not to rely solely on the advertised sale price. You should budget an additional 12% to 14% of the purchase price to cover all mandatory taxes and fees.
No, this is the most important difference to understand:
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For a new-build property (sold by a developer), you pay VAT (IVA) + AJD.
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For a resale property (second-hand), you pay ITP.
IVA (Impuesto sobre el Valor Añadido) is the Spanish equivalent of VAT (Value Added Tax). For the purchase of a new-build property, the national rate is 10% of the sale price.
The AJD (Impuesto de Actos Jurídicos Documentados) is a regional stamp duty tax on legal documents. It is added to the IVA when purchasing a new-build property and represents between 1% and 1.5% of the price, bringing the total taxation for new-builds to approximately 11.5%.
The ITP (Impuesto de Transmisiones Patrimoniales) is the Property Transfer Tax. It replaces IVA for resale properties (second-hand). It is a regional tax, so its rate varies across Spain.
Yes, significantly. This is a crucial point for your budget. For example:
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Madrid: 6%
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Andalusia (Costa del Sol): 7%
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Valencian Community (Costa Blanca): 10%
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Catalonia (Barcelona): 10%
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New-build Property: Approximately 11.5% (10% IVA + ~1.5% AJD).
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Resale Property: Between 6% and 10% (ITP only), depending on the region.
No, it's not technically "mandatory", but it is highly recommended and essential for international buyers. The solicitor is the only professional who defends your interests and performs "due diligence" (checking for debts, permits, etc.).
Solicitor's fees typically range from 1% to 1.5% of the purchase price (excluding taxes). This is the cost of ensuring the security of your transaction.
There are two mandatory administrative fees:
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Notary Fees (Notaría): For the deed of sale (approximately 0.5% to 1%).
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Land Registry Fees (Registro de la Propiedad): To register the property in your name (approximately €400 to €800).
Since a 2019 law, the bank pays the majority of the mortgage establishment fees (notary, registry, AJD).
The buyer almost always has to pay two things:
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Property Valuation (Tasación): A mandatory appraisal requested by the bank (cost: €300 to €500).
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Arrangement Fees: Increasingly rare, these can range from 0.5% to 1% of the borrowed amount.
This is the official property appraisal (valuation), carried out by an independent expert (the tasador). The bank uses it to determine the maximum amount they can lend you (generally 70% to 80% of this value).
Unlike the UK or US legal systems, the Spanish notary does not carry out in-depth checks on prior debts or planning permits. It is your solicitor who ensures that the property you are purchasing is "clean" – free from hidden debts (community fees, taxes) and that any additions like a swimming pool or extensions are legal.
Certainly. For a resale property costing €200,000 in the Valencian Community (ITP at 10%):
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ITP (10%): €20,000
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Solicitor (1%): €2,000
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Notary (0.75%): €1,500
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Land Registry: €500
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Total Fees: €24,000
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Total Purchase Cost: €224,000 (representing 12% in additional fees on top of the price).
