Taxation When Buying a Home in Spain: What Every Buyer Should Know

Buying a home in Spain is one of the most important decisions in anyone’s life, and it’s essential to understand not only the purchasing process, but also the taxes involved. Taxation can vary significantly depending on whether you’re buying a new or second-hand home. In this article, we’ll explain the main taxes you’ll need to consider.

  1. Property Transfer Tax (ITP)

If you are buying a second-hand property, the Property Transfer Tax (ITP) is one of the main taxes you will have to pay. This tax is applied to the sale price of the property and its percentage varies depending on the autonomous community where the property is located, generally between 6% and 10%. For example, in Madrid, the tax rate is 6%, while in Catalonia it can reach 10%. It is important that you check the rate applicable in your community to correctly calculate the cost.

  1. VAT: Value Added Tax

In the case of the purchase of a new home, instead of the ITP, you will have to pay VAT, which is currently set at 10% of the price of the property. However, if the home is located in an officially protected area, this percentage can be reduced to 4%. This tax is added to the purchase price and is paid at the time of the public deed before the notary.

  1. Other Taxes and Associated Expenses

In addition to the ITP or VAT, there are other expenses and taxes to consider when purchasing a home:

  • Documented Legal Acts (AJD): This tax is applied to the formalization of the deed and va

ries between 0.5% and 1.5%, depending on the autonomous community.

  • Notary and Registry: The notary fees for the public deed of sale and the property registration fees are also expenses that you will have to assume. These may vary depending on the price of the home.
  • Agency fees: If you decide to hire an agent to help you with the paperwork, this will also generate an additional cost.
  1. Deductions and Exemptions

It is important to be aware of the possible tax deductions and exemptions that may apply to your situation. For example, if you are a first-time buyer and you purchase a primary residence, you could benefit from some deductions in the personal income tax, although these vary depending on the autonomous community and the laws in force.At A&G Lawyers, we are experts in real estate law and are here to guide you through every step of your purchase, ensuring that you comply with all your tax and legal obligations. Contact us today and ensure that your home purchase goes smoothly!