Considering buying or selling a home in Spain? Learn what taxes you’ll owe on the property in this helpful guide.
4 min read
When it comes to real estate sales in Spain, everyone wants a piece of the pie: the notary, property registrar, real estate agency and—last but not least—the tax office! So if you want to know what taxes you'll have to pay when buying or selling a house, read on to learn about the IVA, IGIC, IAJD, and ITP. Let’s go! Regardless of whether you want to buy or sell a beach-side condo, a mountain hut, or your cousin's villa in Alicante, you'll need to get familiar with all the applicable taxes and fees in Spain. Let’s discuss the ins and outs, starting with taxes on property sales.
Taxes on property sales
All financial transactions in Spain are subject to taxation, and property sales are no exception. Anyone looking to sell their home in Spain will face three types of taxes:
Personal Income Tax (IRPF—Impuesto sobre la Renta de las Personas Físicas): To support public spending and boost the social welfare state, you’re progressively taxed on your income, depending on how much your total earnings are for the financial year. Along with your salary, income from real estate sales should be declared on your income tax return. Here’s how the tax brackets—along with their respective tax rates—look like in Spain:
Personal Income Tax (IRPF—Impuesto sobre la Renta de las Personas Físicas) Table
> €12,450
19%
€12,450–€20,200
24%
€20,200–€35,200
30%
€35,200–€60,000
37%
€60,000–€300,000
45%
> €300,000
47%
Municipal capital gains tax: Known as IIVTNU (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) in Spanish, this is a local municipal tax that’s charged by the town hall when a property is sold. It’s a land value tax—that is, you’re taxed on the increased value of the urban land where your property is located, for the duration of your ownership. You’ll need to pay this at the town hall within 30 working days after the sale—or within six months if you’re inheriting the property.
Real Estate Tax (IBI—Impuesto sobre Bienes Inmuebles): This tax must be paid by owners of certain types of real estate, such as business premises, housing, or garage spaces. It’s paid annually to the city council (Ayuntamiento) in the district where the property lies. However, the seller and the buyer may reach an agreement to split the tax proportionally to the date of sale—or the seller can pass on the remaining tax by increasing the sale price.
Taxes on property purchases
If you're planning to take the plunge and buy real estate in Spain, you’ll want to consider the various taxes you’ll have to pay when planning out your budget. These taxes may vary depending on a variety of factors—such as the type of property you want to buy, the municipal jurisdiction it’s located in, and the total floor space.
Buying a new building
If you want to buy a brand new property, you'll have to pay two types of taxes:
Value Added Tax (IVA—Impuesto sobre el Valor Añadido): Value added tax (or VAT for short) is a general, indirect tax levied on the purchase of goods or services. Value-added tax on new buildings carries a reduced rate of 10% on the sale price of standard properties, and 4% in the case of publicly-subsidized housing. If you purchase a property in the Canary Islands, you'll either have to pay the Canary Islands General Indirect Tax (IGIC) of 7%, or a tax of 5% for a “primary residence” purchase. This second tax is applicable if the taxable base doesn’t exceed €150,000 (though the limits for large families are higher) and you aren’t already a home or usufructuary owner. If you're buying a house in Ceuta or Melilla, you'll have to pay the Tax on Production, Services, and Importation (IPSI).
Stamp Duty (AJD—Impuesto sobre Actos Jurídicos Documentados): Stamp duty is levied on public deeds and is part of the Conveyance Tax and Stamp Duty—an indirect tax applied to transfers of property for valuable consideration, corporate transactions, and notarized legal acts. This tax is applied to the purchase price, and rates vary in each region.
Buying a non-new property
Besides the purchase price itself, taxes are one of the most significant expenses to consider when buying a formerly-used property. Here, you’ll need to pay transfer tax (ITP—Impuesto de Transmisiones Patrimoniales) instead of VAT. The ITP rate varies according to your region as well as your personal circumstances, with rebates for those under 30 years old, first home buyers, real estate in rural areas, or those with large families. You’ll need to calculate what you owe using an official tax self-assessment, and then transfer the amount to the Spanish Tax Office account via one of its partner banks. To give you an idea of the figures, the following table shows the ITP transfer tax rates for several regions:
ITP (Impuesto de Transmisiones Patrimoniales) rate per Region
Andalusia
8%
Balearic Islands
8%
Canary Islands
6.5 %
Castilla La Mancha
9%
Catalonia
10%
Community of Madrid
6%
Extremadura
8%
Galicia
10%
Murcia
8%
Basque Country
4%
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FAQs
From the moment the property deed is signed or the transaction is closed, the buyer has 30 working days to pay the transfer tax and stamp duty (ITP and AJD) to the City Council (Ayuntamiento). If the payment is late, penalties or fees will be charged. In the case of new buildings, the buyer must pay VAT when the property is transferred into their name, or when they sign the title deeds.
Those who buy a formerly used property in Spain pay the transfer tax (ITP). They may also need to pay a proportion of the real estate tax (IBI) for the time they own the property during the year of purchase.
Both transfer tax and stamp duty are payable at your local public tax administration offices, or online through the virtual office of the Andalusian Tax Agency.
