Property purchase taxes in Spain: what foreign buyers should know

Taxes are one of the main costs of buying a home in Spain, and one of the areas where foreign buyers make the most mistakes. Understanding property purchase taxes in Spain before you sign means you can plan your budget with confidence and avoid surprises after completion.

As part of my legal service in every purchase, I advise you on the taxes involved, from the first estimate of costs to your obligations as an owner.

Which taxes do you pay when buying a property in Spain?

It depends on whether the property is a resale home or a new build. In Andalusia, the main taxes are:

• Resale homes: transfer tax (ITP) of 7%.
• New builds: VAT (IVA) of 10%, plus stamp duty (AJD) of 1.2%.

On top of the taxes, you pay notary and Land Registry fees, and legal fees. In total, buyers usually budget around 10% of the price for a resale home and around 13% for a new build. Tax rates are set by each region and can change, so I confirm the exact figures for each purchase.

How I advise you on the taxes of your purchase

1. A clear estimate of costs

Before you commit, I prepare a list of all the taxes and expenses of your purchase, so you know the real total from the beginning.

2. Tax checks in the due diligence

I check whether the property has unpaid local taxes, such as the annual property tax (IBI), or unpaid community fees. These debts are linked to the property and could become your problem after the purchase.

3. Buying from a non-resident seller

If the seller is not resident in Spain, the buyer must withhold 3% of the price and pay it to the Spanish Tax Agency. It is a legal obligation of the buyer, and I make sure it is handled correctly at the signing.

4. Cross-border considerations

Buyers from the United States or the United Kingdom often ask how their Spanish property will affect their taxes at home. Spain has double taxation agreements with both countries. I explain the Spanish side, and I recommend that you also check with your tax adviser in your country of residence.

5. Tax clauses in the contract

I review the purchase contract so that the payment of taxes and expenses is clearly allocated between buyer and seller.

Taxes after the purchase: owning a home in Spain as a non-resident

Owning a property in Spain also brings yearly obligations:

• IBI: the annual local property tax, set by each town hall.
• Non-resident income tax: if you do not live in Spain and do not rent the property, you still pay tax on an imputed income, calculated on a percentage (1.1% or 2%) of the cadastral value. The rate is 24% for residents of the United States or the United Kingdom, and 19% for residents of the European Union.

For the clients I advise on their purchase, I also file these non-resident tax returns every year.

One lawyer for the legal and tax side of your purchase

Combining legal and tax advice in one service means you have a single person following your file, with nothing left to chance. Read more in Buying a property in Spain: what foreign buyers need to know and about my work as a real estate lawyer in Seville.

Download my private guide, Purchasing a home in Spain, or request a private consultation.

This article contains general information and does not replace personalised legal or tax advice.