Having just moved to Spain, I’ve been house-hunting recently, and it’s been overwhelming. I finally found a place I liked, but then the agent and lawyer sent over a list of fees. The taxes alone were a long list—IVA, ITP, AJD… it was all too much. After a few days of research, I’ve finally figured it all out. I’m sharing what I learned to help others on the same journey and hopefully save you some headaches.
New-Build vs. Pre-Owned Homes: A Major Tax Difference
First, it’s crucial to understand that the biggest tax difference when buying property in Spain depends on whether you’re purchasing a new-build home or a pre-owned (second-hand) home. The types of taxes for these two property types are completely different and mutually exclusive—you only pay one, not the other.
- Buying a new-build home: You primarily pay IVA + AJD.
- Buying a pre-owned home: You primarily pay ITP.
Taxes on New-Build Homes Explained
If you’re buying a brand-new home directly from a developer, you’ll be paying Value Added Tax (VAT), known as IVA. The rate is fixed in most parts of Spain, generally at 10% of the property price. For example, on a new €500,000 apartment, the IVA would be €50,000. For government-subsidized housing (Vivienda de Protección Oficial), the rate is lower, typically 4%. In addition to IVA, you’ll also need to pay Stamp Duty (Actos Jurídicos Documentados or AJD). This is a regional tax, so the rate varies by autonomous community, typically ranging from 0.5% to 1.5% of the property price.
Taxes on Pre-Owned Homes Explained
If you’re buying a pre-owned home that someone has lived in before, you don’t pay IVA. Instead, you pay Property Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP). This is also a regional tax, with rates set by each autonomous community, so there are significant variations across Spain. Generally, the rate ranges from 6% to 10%. ITP is the largest tax expense when buying a pre-owned home, and the city you choose to buy in will directly impact how much you pay. I’ve compiled a simple table with more details on Spanish property taxes for you to reference the rates in some popular regions:
| Autonomous Community | Reference ITP Rate |
|---|
| Madrid | 6% |
| Catalonia | 10% |
| Andalusia | 7% |
| Valencian Community | 10% |
Finally, a quick reminder: besides the main taxes mentioned above, there are other ‘smaller’ costs throughout the buying process, such as notary fees, property registration fees, and legal fees. When you add all these costs up, it’s wise to budget an extra 5%-8% 10%-15% on top of the property price to be safe. I hope this information is helpful! Which city did you buy your property in? How much ITP did you pay? Feel free to share your experiences in the comments below!
