A Guide to Taxes for Non-Resident Buyers When Purchasing Property in Spain

If you're considering purchasing a property in Spain as a non-resident, it's essential to understand the taxes and fees involved in the process. Spain's real estate market offers a plethora of opportunities for investment, but navigating the tax landscape can be complex. In this guide, we'll break down the taxes and fees that non-resident buyers are obliged to pay by law when purchasing property in Spain.

1. Value Added Tax (VAT) or Transfer Tax

The type of tax you'll pay depends on the property you're purchasing:

- VAT (Impuesto sobre el Valor Añadido, IVA) applies to the purchase of new properties and commercial properties. The standard VAT rate is 10% in most of Spanish regions.

- Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, ITP) is applicable to the purchase of resale properties. The rate varies between 6% and 10%, depending on the region where the property is located. In Valencian Community it is 10%, in Murcia 8%, in Andalucia 7%. Depending on the profile of the buyer, certain reductions can be applied. 

2. Stamp Duty (AJD - Actos Jurídicos Documentados)

Stamp Duty is a tax levied on certain legal documents, including property purchases. The rate varies between regions and can range from 0.5% to 1.5% of the property's purchase price, depending on municipality and the region. Applicable only for new build properties. 

3. Notary Fees and Property Registry Fees

Notary fees are incurred for the drafting and formalization of the property deed, while property registry fees are associated with registering the property in the Land Registry. Both fees are based on the property's purchase price and are set by law.

4. Legal and Administrative Costs

Engaging legal representation to oversee the property purchase process incurs additional costs. These may include legal fees for reviewing contracts, conducting due diligence, and facilitating the transaction.

5. Mortgage-related Costs (if applicable)

If you're financing your property purchase with a mortgage, additional costs such as mortgage arrangement fees, property valuation fees, and mortgage registration fees may apply.

Understanding these taxes and fees is crucial for budgeting and planning your property purchase in Spain. Working with local legal and financial experts can help ensure a smooth transaction and compliance with Spanish regulations. Remember, tax rates and regulations may vary between regions in Spain, so it's advisable to seek region-specific advice when purchasing property.

At Larrosa&Co Properties, we're dedicated to helping our clients navigate the complexities of property transactions in Spain. Contact us today to learn more about purchasing property as a non-resident and how we can assist you every step of the way.

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