Taxes on the purchase of real estate in Spain for foreigners

  • 7 months ago
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Spain attracts not only foreign investors looking to buy property in this beautiful country, but also people all over the world who dream of moving here and enjoying the Spanish sun, sea, delicious food and open mentality of the local population. However, before you make a purchase, it is important to consider the tax aspects of the process. In this article we will look at the main taxes on the purchase of real estate that foreign buyers face when purchasing housing in Spain. I. Tax on the purchase of secondary real estate: property transfer tax (ITP) What is Property Transfer Tax (ITP)? This tax is regional and is levied when purchasing secondary real estate. Who pays tax on real estate acquisition? It is paid by the buyer of the property. How is the ITP tax rate determined? The tax rate varies depending on the region: 6-11%. In the Valencian district it is 10% of the value of the property. However, the rate may change depending on changes in regional legislation or changes in tax policy. How and when to pay tax? This tax is usually paid within 30 days after the conclusion of the contract for the purchase of real estate. II. Tax when purchasing a new home: Value added tax (VAT) What is Value Added Tax (VAT), or IVA in Spanish? Value added tax is a federal tax that is not only levied on the sale of goods and services in Spain, including the sale of new homes. What VAT rate applies to the purchase of a new home in the Valencian region? It is 10% of the property value. Who pays VAT when buying a new home? It is paid by the buyer purchasing a new home. How and when to pay VAT tax? Value added tax (VAT) when purchasing a new home must be paid along with the full cost of the home. Typically, the buyer must pay VAT at the time of signing the purchase agreement or when transferring the property. III. Tax on documented legal actions (IAJD) What is the Tax on Documented Legal Actions (IAJD)? This is a tax that is levied on the execution of notarial documents such as real estate sales contracts and mortgage agreements. It represents a certain percentage of the transaction value and may vary in different regions of Spain. What AJD tax rate applies in the Valencian District? The rate of this tax is a certain percentage of the transaction value and depends on the type of property purchased. For example: If we are talking about the acquisition of secondary real estate, then a fixed AJD rate applies to the printed paper on which notarial documents are drawn up, and amounts to 0.30 euros per sheet and 0.15 euros per page. however, when it comes to new housing, the buyer must pay both a flat tax rate (0.15 euros per page) and a variable tax rate of 1.5% Who pays IAJD tax when purchasing real estate? It is paid by the buyer of the property. How and when to pay IAJD tax? It is usually paid at the time of execution of notarial documents. The buyer will have to pay this tax along with other transaction costs when purchasing the property. These are the three main taxes you may face when purchasing property in Spain, depending on the type of property purchased. But do not forget that in addition to this, you will also need to pay a notary fee and a property register fee. This amount is calculated individually, but can vary from 1200-1500 euros. It is important to note that tax rates and rules may change over time, so it is advisable to contact a real estate agent to ensure up-to-date and accurate information on tax obligations when purchasing property in Spain for foreigners. You can get information about other taxes associated with owning property in Spain in the article “Taxes on property ownership in Spain for foreigners

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