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Existing homes: Transfer tax
In Spain, transfer tax is payable on existing buildings, which can vary from 6% to 11% depending on the region. In the regions that are popular for foreigners, the transfer tax is almost 10% everywhere.
In some regions (autonomous communities) real estate companies can get a 70% reduction. The effective rates then vary from 2.1% to 3%. Here are conditions applicable, these can be requested from us.
New homes: VAT
The low VAT rate of 10% applies to new homes.
Special: for commercial (commercial) real estate and building land the high VAT rate of 21% applies. For later construction of a garage or swimming pool for example, the high VAT rate of 21% also applies.
If you buy a plot with a construction contract linked to it, the low VAT rate of 10% applies to both. This VAT can be settled or reclaimed if business activities are involved.
For existing homes that have been thoroughly renovated, it is possible to opt for sale ‘as a new home with 10% VAT‘ instead of selling as an existing home with transfer tax. The advantage of opting for the VAT regime is that VAT on the costs incurred (such as the contractor) can then be deducted.
Other purchase cost in Spain
There are also costs for the notary, the property register and the land register. For the total of these, as a rule of thumb, you can maintain a máximum of 0.5%. In the case of new construction, a ‘documentary tax’ of 0.75% to 1.5% of the purchase price is also applicable (this may differ slightly in some autonomous regions).
When buying a property in Spain you have to assume a total amount of taxes and costs of approximately 7% to 12% of the purchase price. Account has been taken of guidance, taking care of the registration in the land register and property register, bank charges for any mortgage, possible translations, etc.
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