What taxes should you pay when buying a home in Spain?
Housing taxes in Spain when purchased vary depending on whether it is new or used, as well as the territory where you live.
In this article we clarify all your doubts.
Housing taxes in Spain: what you have to pay as a buyer
There are housing taxes in Spain for the purchase, sale and possession.
Here we are going to focus on those taxes you pay when you are a buyer.
It is convenient, however, to point out two points: the first, that if the house is new, a tax is paid and if it is used another; the second, that in Spain the Autonomous Communities have ceded the management and collection of some of these taxes, hence the amount to be purchased may vary.
As a house is an expense-investment of a large amount, all the associated taxes and their territorial differences have to be calculated.
Let’s see the different taxes you have to pay and the amount of them:
1. Housing taxes in Spain: Value Added Tax (VAT)
The Value Added Tax (VAT) will be paid whenever a new home has to be bought.
In Spain, the tax rate set for these operations is 10% recorded in general operations; however, if that new home is a VPO (Official Protection Housing) or public promotion, it will drop to 4%.
We understand by new housing the one that is sold for the first time from the promoter directly.
In addition, the tax applies not only to housing, but also to storage rooms and garages, as well as to the estate of single-family houses.
Hence, it is interesting to have a plan of everything that is going to be bought and what affects the tax.
In general, and if it is new construction, the usual thing is that we pay a little more VAT than ITP when we talk about free housing.
Another issue is the VPO, where it is perfectly possible that the ITP tax rate is above.
2. Impuesto sobre la transferencia de propiedades (ITP)
The Property Transfer Tax (ITP) is administered by the Autonomous Communities, which have assigned it.
This tax levies all second-hand or subsequent houses, that is, those that are sold directly from the owner.
And like the CC. AA. They collect it, they also have regulatory capacity and decide how much to charge.
In Spain, the minimum ITP rate for second-hand homes is between 6 and 11%.
There are numerous exceptions or special cases depending on the area, the community or the characteristics of the house.
Of course, and it is extremely important: you have to pay the tax within a maximum of 30 days from the acquisition of the house.
And you will have to do this before the tax organisation depends on your community. Be careful, many people do not do it due to ignorance and then are exposed to numerous sanctions for it.
As the difference can be significant, we advise you to consult with a tax law specialist such as Asesoria Orihuela Costa.
This consultation can save you several thousand euros on a purchase.
In addition, and unlike what happens with VAT, it is relatively common for the ITP to vary from one year to the next depending on the Law of Accompanying the Budget of each Community.
3. Tax on Documented Legal Acts (AJD)
The Tax on Documented Legal Acts (AJD) is applied when a property is registered, including a house.
Of course, he thinks that this will happen as long as it is not a second-hand housing mortgage, in which case it is the lender who has to pay it.
It also has a tax rate that ranges between 0.5 and 2%.
It must also be said that many people who once paid this tax can claim it if they signed a mortgage.
Of course, if you buy a new home, you will have to take care of the tax payment. And, as with the ITP or the VAT, the deed value (or the reference value) is taken as a reference.
The IJD is a tribute about which until 2018 there was a certain confusion, although now it is more defined.
You also have 30 days to pay.
This is a confusing tax, hence it is extremely important to know who and how much they have to pay.
In short...
Housing taxes in Spain are of several types and it is convenient that you know them because they are one more cost that you must calculate.
Do you need specialised advice for this case?
Don’t worry, at Asesoría Orihuela Costa we tell you what the main problems and cases are.
Contact us to learn more!
