Taxes to Consider When Buying and Selling Property in Spain

One of the questions we commonly get asked by our customers and potential clients is 'How much does it cost to buy/sell a property in Spain?' Unfortunately, this isn't a question that we have a fixed-number answer to, as many factors come into consideration.

When purchasing property in Spain, there are costs for both the buyer and the seller.

Costs to Be Paid by the Buyer: Resale Properties

Between resale properties and newly built homes, there are some differences between costs which have to be paid. We will explain other costs associated with purchasing newly built properties below.

Notary fees. These costs are for the 'Escritura', which has to be written up by a notary professional in Spain. The Escritura of your property is the Title Deed and, according to Spanish law, the costs of the Escritura should be paid by both parties, not just the buyer. However, with many property sales these days, the buyer pays all the notary fees for the Escritura, which tends to cost somewhere between 600 and 1000 euros depending on the property's value.

Property registry costs. This is based on the value of your property and can vary between different municipalities. In most cases, the cost is between 400 and 650 euros.

Gestoría costs. The gestoría is the office that will deal with government agencies on behalf of its clients, making the process of buying and selling a property much smoother. Gestorías are commonly used to avoid problems with official Spanish government agencies, making it much worth the cost, as Spain is well known for its bureaucracy. The Gestoría will handle tax payments and paperwork for the deeds and mortgage, if applicable. The fee for this service usually costs around 250 to 500 euros.

Property transfer tax. If you're buying a resale property, the buyer is responsible for paying the property transfer tax. This differs for a newly built property (see below). This tax varies between different autonomous communities and municipalities. In Andalucía, you can expect to pay between 8% and 10% of the property's selling price, slightly above the national average of 7.9%.

Property valuation costs. This is usually only required by the bank if you are taking out a mortgage on the property you intend to buy. A buyer can expect to pay around 800 euros for an appraisal.

Other Costs to Consider for the Buyer: Newly Built Properties

If you are buying a newly built property directly from the developer, you don't pay for the normal property transfer tax. Instead, you pay IVA (VAT) of 10% on the property's sale price. You also pay IAJD (Impuesto sobre Actos Jurídicos Documentados), which is Tax on Documented Legal Acts; expect to pay between 0.5% and 1.5% of the sale price.

Taxes due when buying and selling property in Spain

Costs to Be Paid by the Seller

Estate agency commission. When selling a property through a real estate agent, you will pay a commission fee. The national average is 5% of the property's sale price. The seller can later deduct the cost of the real estate agency commission fee from their capital gains tax (see this tax explained below).

Your estate agency will be able to guide you through the process of selling your property, making the process much easier. They will be aware of all the fees involved and the legal process. A good real estate agency will also have trusted connections in all services you may require, including, but not limited to, solicitors and tax advisers.

A real estate agency will also advertise your property to potential buyers as well as other estate agencies. CostaSpace advertises our client's properties both nationally and internationally. We publish our properties on multiple platforms and work will many estate agencies on the Costa del Sol, ensuring your property is advertised to a wide audience.

Capital gains tax. This is a tax on the profit made by the sellers of the property and has variable rates. The current tax rates for 2017 are:

19% on the first 6,000 euros
21% between 6,000 and 50,000 euros
23% from 50,000 euros upwards

For example: the seller bought the property ten years ago at the cost of 80,000 euros and has now sold the property for 230,000, making a profit of 150,000. The tax is divided into the different rates as follows:

19% on the first 6,000 euros = 1,140 euros
21% between 6,000 and 50,000 euros = 10,500 euros
23% from 50,000 euros upwards (150,000 - 56,000) = 21,620 euros

From a profit of 150,000 euros, there are 33,260 euros to be paid in capital gains tax.

However, there are some exceptions for the seller when it comes to paying capital gains tax, for example, if the seller is over 65 years of age and have lived in the property as their primary residence for over three years.

All costs associated with the property, such as renovations, legal expenses, gestoría expenses, real estate agents fees, etc, can be deducted from the capital gains tax.

Income Tax Provision (Retención) for Non-Residents only. If the seller of the property is not a Spanish resident, they must pay 3% of the property's sale price to the Spanish tax office. This is an income tax provision and covers the taxes from the property's sale. The seller can claim this back if they believe that their tax liability is less than the property value's 3%.

Energy certificate. As of June 2013, property owners who wish to sell or rent their property require an energy certificate. They must be issued by an architect, surveyor or technical property engineer. The costs associated vary between the size of the property, but can expected to be in the region of 100 to 500 euros. Again, this fee can be deducted from the Capital Gains Tax.

Plusvalía. This works much in the same way as the Capital Gains Tax, as it is the tax paid on the increase of value of the ground the property stands on. This tax is paid to the town hall (Ayuntamiento) and varies between municipalities and the period of ownership of said property. This can be requested at your local town hall. While commonly paid for by the seller, there have been cases where this has been paid for by the property's new owner with prior agreement.

If you have any questions regarding the costs associated with buying or selling property in Spain, do not hesitate to get in touch with CostaSpace so that we can advise you accordingly.

Buying or Selling Property in Spain? Contact Costa Space!

Costa Space is an independent estate agency based in Calahonda providing comprehensive property services for Marbella, Mijas Costa and Fuengirola areas in the Province of Malaga.

We are a progressive and innovative agency continuing to strive for excellence through providing sound property advice to our clients and using the latest in the next generation marketing. If you're interested in buying or selling your property on the Costa del Sol, please do not hesitate to contact us.

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