What taxes do you pay when buying a property in Spain as a non-resident?

Are you longing for a more relaxed way of life? With its sunny hours, breathtaking scenery, delicious cuisine, and friendly locals, Spain has always been a top choice for those looking to move abroad or own a holiday home. 

Buying a property in Spain involves more than just the sale price. A long list of fees and property taxes can quickly add up. In this guide, we'll walk you through the essential information you need about property tax in Spain, making buying your Spanish dream home more transparent.

How easy is it for non-residents to buy a property in Spain?

Buying a property in Spain as a non-resident is relatively straightforward. However, it's important to note that mortgage conditions may differ, and lenders may ask for additional documentation, such as proof of income, to assess your eligibility for a mortgage. 

Obtaining a foreigner's identity number (NIE) is essential when buying a property in Spain. Fortunately, getting this document is relatively easy, especially for EU citizens.

The location you choose will significantly impact the property's price. Madrid, the capital city, typically features higher property prices. However, considering coastal regions, you'll find a broader range of prices to suit various budgets.

Continue reading to discover everything you need about mortgage eligibility, requirements, and opportunities for EU citizens interested in getting a mortgage in Spain.  

Homevest, a digital solution that helps you obtain a mortgage from abroad

Homevest simplifies your cross-border house-buying journey, bringing it together in one convenient platform.

With Homevest, you get support in preparing documents and sending requests to banks without incurring additional fees. As a free service designed exclusively for your benefit, Homevest streamlines the process and saves you valuable time.

What taxes do non-residents pay when buying a property in Spain?

The costs of buying a property in Spain depend on several factors, such as the location and the type of property you are purchasing. 

Whether you are buying a new property from a developer or a resale property from an individual, there are various taxes that you need to consider. These taxes include Value Added Tax (VAT), Transfer Tax, and additional fees for notary and registry services. 

It's essential to understand the specific taxes applicable to your situation and consider them in your budget when purchasing a property in Spain.

What are the property taxes for resale properties in Spain?

When purchasing a resale property in Spain, the main tax is the transfer tax, known as "Impuesto de Transmisiones Patrimoniales" or ITP. 

The amount payable depends on the property price and is calculated on a sliding scale. The transfer tax on the Costa del Sol has been simplified to a flat rate of 7% for all properties. 

Transfer tax also applies to other property types, such as garage spaces, with rates varying based on the price. For garage spaces up to 30,000 EUR, the rate is 8%, while for those priced between 30,000 and 50,000 EUR, it is 9%.

The Property Transfer Tax varies by Autonomous Community, with a minimum of 6% and a maximum of 10% on the price of the property.

Let's assume you are buying a second-hand property worth 350,000 EUR in Madrid. In addition to the sale price, you will have to pay another 25,875 EUR for the following taxes: 

Simulation rates on May 24, 2023. Prices may vary depending on the value of the property

What are the property taxes for new properties in Spain?

When purchasing a new-build property in Spain, you are responsible for two taxes:

1. Value Added Tax or VAT (IVA in Spanish), which is calculated at a rate of 10% of the purchase price 
2. Stamp duty (AJD in Spanish), which is usually between 0.5% and 2% of the purchase price

The Stamp duty tax varies in different regions, so checking with the regional government is a good idea. In Madrid, for example, stamp duty is 1.5%.

​​If you buy a new property worth 650,000 euros in Madrid, you will pay 69,105 EUR in taxes:

Simulation rates on May 24, 2023. Prices may vary depending on the value of the property

What are the notary costs when buying a property in Spain as a non-resident? 

Besides property taxes, you need to factor into your initial budget several costs: 

• Registration fees (to register the title deed with the land registry)
• Notary fees
• Estate agency fees 
• Survey fees 

Notary fees cover the preparation of title deeds and witnessing the signing of the deeds by both parties. These fees are typically around 0.5% to 1% of the purchase price, with mortgages attracting higher costs. 

Land Registry fees, ranging from 0.5% to 1%, are charged to record the property ownership officially. 

Real estate agent fees, usually paid by the seller, can range from 2% to 10% or more, depending on the property type and exclusive contracts. 

What other taxes should you consider when buying a property in Spain?

1. Property appraisal: a property appraisal is typically required by banks and can range between 300 and 600 EUR
2. Annual property damage insurance: owning a property in Spain often requires mandatory property damage insurance. The cost of insurance depends on factors such as the type and value of the property
3. Life Insurance: some banks may require you to take out a life insurance policy along with your mortgage
4. Initial fee: certain banks may request a one-off fee ranging from 0.1% to 2% of the mortgage value when signing the mortgage agreement
5. Early repayment fees: if you have a fixed interest rate mortgage, some banks may impose a fee between 0.25% and 2% of the mortgage amount if you repay the entire loan within the first 1 to 3 years

Understanding the various taxes and costs associated with buying property in Spain is crucial for non-residents. 

Homevest makes this process more manageable, providing a streamlined platform that simplifies securing a mortgage from abroad, helping you turn your dream of owning Spanish property into reality.

Sources used for this article:

1. Sales cost calculator
2. Taxes and fees when buying a property in Spain

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.