Taxes to pay when Purchasing Property in Andalucia

Right, so if you're going to buy a property in Spain, you need to know how much you should allow on top of the purchase price for taxes and expenses. First thing to say here is that this varies from region to region so these figures are valid for Andalucia only.

The first thing to ascertain is whether the property is classified as new or resale. By this we are referring to "new" only in the legal sense. A property can be 5 years old, but if the developer who built it has never sold it then for all tax purposes it is considered as "new". This is also known as first transmission.

So, a new property would generate the following taxes;

10% IVA (VAT)
1.5% Actos Juridicos Documentados (commonly referred to as AJD in Spanish or Regional Tax in English). This is basically like stamp duty but it ONLY applies to new property as does the IVA. The IVA must be paid at the point of purchase to the developer.

A resale property is only subject to one tax. This is known as the Impuesto de Transmisiones Patrimoniales or ITP for short.

On a resale property you will pay;

8% ITP on property under €400,000. If the property in question is over €400,000 then you will pay 9% on anything over and above the €400,000. Essentially it is banded like income tax. If the property is €450,000 then you would pay 8% on €400,000 and then 9% on the €50,000.

All of the taxes (except the IVA which we have covered) are due to be paid within 30 working days (including Saturdays) from the date of purchase. The percentages are always calculated on the total purchase price.

On top of this you will need to allow an amount for notary and land registry fees, and also the fees agreed with your legal representative. For anything under €120,000 I would allow €1,000 for the joint costs of land registry and notary fees. Anything over that price and allowing 1% should cover you.

Legal fees are usually between €1,200 and €1,800 depending on which firm you use and whether you only need simple conveyancing or the "whole package" with Power of Attorney etc. etc.

There is something happening at the moment where the government will send you a letter requesting more tax for their perceived value of the property. You may purchase for €100,000 and pay your tax accordingly, but the men in suits will ask you to pay tax on €120,000 because that is what they believe the property to be worth. It is a very contentious issue for obvious reasons and I will cover it in greater detail at some point in the near future.