I’ve been looking at properties in Valencia lately, and my head is spinning. I’ve discovered that on top of the property price, the various taxes and fees are the real major expense, and the taxes for new vs. resale homes are completely different. After a few days of research, I’ve finally figured out the property purchase taxes in the Valencian Community, so I’m sharing this to help others who are on the same journey.
Two Main Taxes: IVA vs. ITP
When buying property in Spain, you’ll mainly encounter two types of taxes: IVA and ITP. Simply put, you pay IVA on new builds and ITP on resale properties. These two taxes are mutually exclusive, meaning you pay one or the other, but not both, so don’t get them confused. Both are regional taxes, so the rates can vary between autonomous communities. Here, we’ll focus specifically on the Valencian Community.
Taxes on New Properties
If you’re buying a brand-new home directly from a developer, you’ll need to pay IVA (Value Added Tax). Currently, the standard IVA rate for residential properties in the Valencian Community is 10%. On top of this, you also have to pay an additional tax called AJD (Actos Jurídicos Documentados, or Stamp Duty), which is 1.5% in Valencia. So, the total tax cost for a new property is essentially 10% + 1.5% = 11.5%.
Taxes on Resale Properties
If you’re buying a resale property, you’ll pay ITP (Impuesto de Transmisiones Patrimoniales, or Property Transfer Tax). This is a bit more straightforward. The current standard rate in the Valencian Community is 10%. However, there are some reductions available for ITP. For example, if you are under 35 years old or purchasing a VPO (subsidized housing), the rate could be reduced to 8% or even 4%. But the conditions are quite strict, so most people will fall under the standard 10% rate. I’ve put together a simple table to make it clearer:
| Tax Type | Applicable To | Rate in Valencian Community |
|---|
| IVA | New-build properties | 10% |
| ITP | Resale properties | 10% |
| AJD | Additional tax on new builds | 1.5% |
Besides these major taxes, don’t forget about other costs like notary fees, property registration fees, and potential real estate agent and lawyer fees. These miscellaneous expenses, which are all part of the process of buying property in Valencia, typically add up to another 2%-3% of the purchase price. Therefore, a safe rule of thumb is to budget at least 12%-14% of the property price on top of the sale price to cover all taxes and fees. Does anyone have anything to add? Let’s discuss and help others avoid these pitfalls!
