Owning a property in Spain regularly brings great pleasure. The sun, the sea, the quality of life in general. If you have a property in Spain, you can combine the best of both countries by alternating between your home and your second home, and you don’t have to miss out on anything by taking advantage of convenient flight connections. They can even move their main residence to Spain in old age and enjoy the favorable climate.
Despite all the joy, it should not be neglected that a property also incurs running costs; buying alone is not enough. And these include taxes, among other things.
While property transfer tax (land transfer tax) or value added tax (IVA) is payable once on purchase, and income tax on the capital gain and municipal capital gains tax are payable on sale, both property tax and income tax on the ownership of the property must be paid annually after purchase.
If you purchase the property from a previous private owner, you must pay land transfer tax.
Real estate transfer tax is payable by the Autonomous Communities of Spain, which determine the corresponding rates based on their competencies. These range between 6 and 10 %.
If the property is purchased from a developer, VAT is charged at a rate of 4 to 10 % (in exceptional cases up to 21 %, whereby the rate of 4 % only applies to social housing and 8 % to garages, with 10 % being the generally applicable rate).
The private seller must pay income tax on the profit made.
In addition, the seller must pay a so-called capital gains tax to the municipality.
Finally, the purchaser must pay annual property tax to the local authority, which usually ranges from 150 to 500 euros per year, depending on the property.
In addition, the state levies an income tax on the owner’s property (in a way, you could almost call it a kind of wealth tax), which is also between 30 and 300 euros per year, depending on the property.
