It is important to understand the taxes and costs associated with purchasing a property in order to properly plan the budget. In addition to the purchase price, several expenses related to the legal and administrative process must also be taken into account.

Taxes on the purchase of a new-build property

- Value Added Tax (VAT): 10% of the purchase price.
- Stamp Duty (AJD – Legal Acts Documented Tax): 1.4% of the taxable base of the deed of sale, in accordance with the general rate currently in force in the Valencian Community.

In addition to these taxes, the buyer must also cover notary fees, Land Registry registration fees, and, where applicable, legal and conveyancing fees. The deadline to file and pay these taxes is one month from the date of signing the public deed of sale.

Taxes on the purchase of a resale property

Property Transfer Tax (ITP): 9% as a general rate for properties up to €1,000,000. For purchases exceeding this amount, a rate of 11% is applied to the excess, in accordance with current regulations in the Valencian Community.
Reduced rates and tax benefits are available for certain groups, such as young buyers, large families, people with disabilities, and other cases established by regional tax regulations. The deadline to file and pay the ITP is one month from the date of signing the public deed.

Notary, registry and legal fees

In addition to taxes, the buyer must also cover certain costs related to the formalisation and registration of the purchase, such as notary fees, Land Registry registration fees, and, where applicable, legal or conveyancing services. These costs vary depending on the property value and the characteristics of the transaction, but as a general guideline, they usually range between 1% and 2% of the purchase price, excluding taxes.

Taxes and costs payable by the seller

The seller is also responsible for certain tax obligations and costs arising from the transfer of the property. These include the Municipal Capital Gains Tax (Plusvalía Municipal), Personal Income Tax (IRPF), or Non-Resident Income Tax (IRNR), where applicable, as well as any costs related to the cancellation of existing charges or mortgages on the property. Taxation will depend on the seller’s personal circumstances, the capital gain obtained, and the tax regulations in force at the time of the transaction.

Municipal Capital Gains Tax

The Municipal Capital Gains Tax (Tax on the Increase in Value of Urban Land – IIVTNU) is a local tax levied on the increase in value of urban land from the time of acquisition to its transfer, and it is paid to the local council where the property is located.

Since the entry into force of Royal Decree-Law 26/2021, taxpayers may choose between two calculation methods: the objective method, based on coefficients set by each municipality, or the real method, which takes into account the actual increase in value obtained. The most favourable method may be applied, provided that the legal requirements are met.

Capital Gains Tax

When the seller obtains a capital gain as a result of the sale of the property, it must be declared for tax purposes. In general, the capital gain is calculated as the difference between the transfer value and the acquisition value, taking into account deductible expenses and taxes, as well as any investments or improvements made to the property, in accordance with current tax regulations.

Resident sellers in Spain

The capital gain is included in the savings base of the Personal Income Tax (IRPF) and is taxed according to the rates in force in each tax year. However, certain exemptions and tax benefits may apply depending on the taxpayer’s personal circumstances. These include the exemption for reinvestment in a primary residence and the exemption applicable to individuals over 65 years of age who sell their primary residence, provided that the legal requirements are met.

Non-resident sellers in Spain

When the seller is a non-resident in Spain, the buyer is required to withhold 3% of the purchase price and pay it to the Spanish Tax Agency as an advance payment of the Non-Resident Income Tax (IRNR) due by the seller. Non-residents are taxed on the capital gain obtained from the sale of properties located in Spain. As a general rule, the applicable tax rate is 19% for tax residents in the European Union, Iceland and Norway, and 24% for residents in third countries, unless a double taxation treaty applies between Spain and the seller’s country of residence.