Taxes on a Spanish purchase

Tax on a Spanish purchase is not one payment but a short sequence of them, split between buyer, seller and town hall. Rates are set by the autonomous community and revised in regional budgets, so the useful thing to learn is not a figure but an order: who pays what, and when.

Two regimes: new build and resale

Everything turns on a single question. Is this the first sale of the home since it was built? A first transfer from the developer sits in the value added tax system. Every later sale sits in the transfer tax system, which the autonomous community administers and collects. The two never overlap: a buyer pays one regime or the other, never both on the same conveyance.

No rates appear here on purpose. They differ by autonomous community and by year, with reductions in some communities for a main home, for younger buyers or for larger families and none in others. Any percentage you find online belongs to one region in one year, so have the current figure confirmed by a local tax adviser or gestor before building a budget on it.

A new build: IVA and AJD

On a first sale the developer charges value added tax — IVA — on top of the price and pays it over to the tax office. It shows on the invoice and in the deed, and it is the buyer’s money even though the seller is the one who remits it. The reduced rate for housing is not the same as the rate on a garage or a commercial unit bought separately, and the Canary Islands run their own indirect tax rather than IVA.

Beside it comes AJD, the duty on documented legal acts, due because the purchase is recorded in a public deed. The buyer pays it, the community sets the rate, and it is self-assessed and settled before the deed can be registered. On its Spanish project SAVO is the seller of a first transfer, so the tax is invoiced with the price, while the duty, the notary and the registry remain the buyer’s own lines in the budget.

One point is often misremembered: where there is a loan, the duty on the mortgage deed itself falls to the lender rather than to the borrower. Ask your bank to set out in writing which of the loan costs are yours.

A resale: transfer tax instead

Buy from a private owner and there is no value added tax. The buyer instead self-assesses ITP, the tax on the transfer, at the rate of the community where the property lies, and no stamp duty is added on top of it.

The filing deadline is short and runs from the date of the deed, which is why a gestor or the buyer’s lawyer normally files within days of the signing. The registry will not record the purchase until that tax is paid — the mechanism that makes the deadline bite.

Two traps deserve naming. The tax authority can value the property itself and issue a further assessment where the declared price sits below its reference value — a bill for the buyer, not the seller. And a resale by a company can fall back into the value added tax regime depending on the seller’s status, a question for an adviser rather than a rule of thumb.

Notary, registry and who bears them

Separate from tax, the signing carries fees. Notaries and registrars charge by official tariff rather than freely, so the amount follows the value stated in the deed and the documents produced, and quotes between offices vary less than people expect.

Add the gestoría that files the taxes and chases the registration, the buyer’s own lawyer, the valuation and arrangement costs where there is a mortgage, and the certified copies of the deed.

Who bears them is partly default and partly negotiation. Spanish law splits the signing costs, leaving the deed itself to the seller and the copy and the registration to the buyer, but purchase contracts routinely move the whole set to the buyer. That clause is short, dull and worth finding before you sign; for a first transfer it usually appears in the off-plan contract.

While you own, and when you sell

Ownership brings the recurring item: IBI, the municipal property tax charged on the cadastral value. Liability attaches to whoever owns on the first day of the tax year, so a sale in spring leaves the seller holding the bill and the contract deciding who reimburses whom. Beside it sit the refuse charge, the community fees, and for non-residents an annual income tax return on rent received or on a notional income where the flat is not let.

Selling brings two more. The seller pays tax on the gain, and the town hall charges plusvalía municipal on the increase in the value of the land over the period of ownership. Where the seller is not resident in Spain, the buyer must withhold a part of the price and pay it to the tax office against the seller’s gain, and can be left liable for the plusvalía if the seller does not settle it.

None of this is exotic, but all of it is regional and dated. Get the rates and reliefs for your community in writing from a local tax adviser before the reservation, not after the deed.