01 – Property Taxes and Costs for BUYERS

01: What TAXES and associated costs must be paid when BUYING a property in Sotogrande, Spain.  

In Andalucía, overall, taxes, legal fees and expenses directly related to the purchase of a completed residential property amount to approximately between 9% and 12% approximately depending on if the property is new or a resale asset.

 

1. First Sale or Transmission – Main Tax Spanish VAT 
2. Resale Properties – ITP Spanish Transfer tax
3. Both New and Resale Properties: 

1. First sale or transmission

The main tax cost in Spain is VAT (or IVA as it is called in Spanish). For the time being, IVA on new properties bought from developers is 10% on residential properties such as villas, apartment etc, plus 1.2% Stamp duty (Actos Juridicos Documentados). Check that the entity that is selling the property can apply IVA to the sale before you pay the IVA, if they are not entitled to charge IVA on the transaction you could still also be liable for the ITP.

NB – For plots of land, commercial premises or commercial garage spaces owned by a developer, promoter or juridical entity, the tax to be paid is V.A.T. (21%), plus Stamp Duty of (1.2%) (Actos Juridicos Documentados).

2. Resale Properties

The Spanish transfer tax, ITP (Impuesto sobre Transmisiones Patrimoniales) is applied to resold properties and is paid by the buyer. It is a tax applied for the purchase of a property. The full amount of ITP will be paid upon the completion of the property and in Sotogrande this tax is: 7% of the purchase price.

ITP is calculated on the higher amount of the following: the purchase price, the “Fiscal value” of the property; (the rate-able value multiplied by a multiple set by the Town Hall) or the “Bank Valuation” of the property if the property is being purchased with a mortgage and the valuation is included in the mortgage deed. You should therefore check how the transfer tax (ITP) will to be calculated on before buying.

If the seller is not a Spanish resident, the buyer (with assistance from a legal advisor) must withhold and pay 3% of the purchasing price to the tax authorities.

3. Applicable to both New and Resale Properties

Costs related to both resale and new builds – These are costs following a property purchase whether it is a resale or a new build:

• Legal fees – It is highly advisable to have a competent lawyer handle all the legal issues relevant to a property purchase. This will lead to an expense, but it is highly recommended. Normally, a lawyer charges 1% of the purchase, but can sometimes be negotiable. 
• Notary Charges – According to law, the Notary’s fees are paid by the vendor, except for the first certified true copy of the title deed. Any subsequent are paid by the purchaser. This cost can be negotiated by both parties.  Notary expenses depend on the complication of the deed and is normally around 0,5% of the total purchase price.
• Registration or Spanish inscription fees – This is the buyer’s responsibility, and normally about 0,5% the purchasing price.
• Currency exchange: To buy a property in Spain, you will have to open a Spanish bank account, and transfer money to it in euros. This will cause expenses related to currency transfers. Remember to check with both the Spanish bank and your local bank. Also advisable is to check currency exchange companies.

Let us help you!

We are always available to discuss specifics and can recommend a number of different reputable professionals who can provide advice in your own language if you prefer. Contact us: info@noll-sotogrande.com

Charles Gubbins.
Email: charles.gubbins@noll-sotogrande.com
Mobile: +34 607 911 661

Stephanie Noll
Email: stephanie@noll-sotogrande.com
Mobile: 34 607 465 383

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