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Buying A Property: Tax Facts To Know

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If you’re thinking of buying a house in Spain or you’re about to sign a purchase agreement, this information may be of interest to you! Here we’ll tell you everything you need to know about the taxes when buying a property. Make a note when your time comes.

Tax on the Purchase of a New Property (VAT)

It’s not the same to buy a newly developed property as a second-hand one when it comes to paying taxes. In the first option VAT must be paid: the purchaser pays the VAT to the seller and the seller pays it to the public treasury. But what does a newly developed property mean? It is the property that is acquired directly from the real estate developer after its construction. What’s the amount of VAT to be paid? 4% for houses of official protection and 10% for those with no official protection (for commercial premises VAT rises to 21%).

Taxes on the Purchase of a Second-Hand Property (ITP)

In the case of buying a second-hand property, the purchaser has to pay the transfer tax (ITP).  The amount of this tax varies according to the Autonomous Community of Spain in which the property is located, but it is usually between 6% and 10%. In this case it is the purchaser who has to go to the public treasury to pay the transfer tax and must do so within a period of less than 30 days from the signing of the contract.

Firma de un contrato

Tax on Documented Legal Acts (AJD)

Another tax is that of Documented Legal Acts. Every time you sign the main agreement on purchase of a property you have to pay this tax when signing the notarial deed. It is a small amount between 0.5% and 1.5%, depending on each Autonomous Community of Spain.

Property Tax (IBI)

The IBI is an annual municipal tax that has the function of taxing the ownership of the property and is paid by the owner each year to the city council. The amount depends on the cadastral value and everyone who has a property (whether living in it or not) is obliged to pay this tax.

Municipal Plusvalia

This is one of the most unknown taxes. This is a tax on gains in value of urban land. If the value of the land where the house is built has increased since the previous owner acquired it, the new proprietor will have to pay the percentage difference.

impuestos por la compra de una vivienda

Now, after you’ve known all about the taxes it’s a good time to buy a property built by CHG, right?

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