Taxes when buying a home in Spain in 2025

Taxes when buying a home in Spain in 2025Taxes & Finance
  • 19.05.2025
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Taxes When Buying a Home in Spain in 2025: The Ultimate Guide

Purchasing a property in Spain is an exciting venture, whether you're an international investor, an expatriate relocating for work or family, or simply in pursuit of your dream holiday home along the Mediterranean coast. However, beneath the picturesque homes and sunny vistas lies a landscape of taxes and legal fees that can significantly impact your investment. Understanding the taxes when buying a home in Spain in 2025 is crucial for effective financial planning and avoiding unpleasant surprises.

This comprehensive article explores every aspect of Spanish property taxes involved in buying a home in 2025. We'll cover core taxes like VAT (IVA), Transfer Tax (ITP), Stamp Duty (AJD), municipal taxes, notary and registry costs, Plusvalía, as well as considerations for residents and non-residents. We'll also delve into strategies for efficient tax budgeting, exemptions, and frequently asked questions. Whether you're a first-time buyer or a seasoned investor, this guide is tailored to provide clarity and confidence as you navigate the Spanish real estate market.

Table of Contents

An Overview: Property Purchase Taxes in Spain

When buying property in Spain, there are several taxes and fees to account for, typically making up 11-15% of the property's purchase price. These major taxes and costs include:

  • VAT (Impuesto sobre el Valor Añadido, or IVA): Charged on new properties.
  • Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, or ITP): Charged on resale, or second-hand, properties.
  • Stamp Duty (Actos Jurídicos Documentados, or AJD): Payable on new homes and in some cases on certain mortgage deeds.
  • Plusvalía Municipal: A local land value tax, often paid by the seller, though in some regions or contracts the buyer may bear this cost.
  • Notary Fees: For certifying the sale.
  • Land Registry Fees: For registering the property in your name.
  • Legal and Agency Fees: Not taxes, but standard costs which add 1-2% to your purchase.

It’s crucial to distinguish between taxes on new-build properties and those for resale homes: the mechanisms and amounts can be quite different. Let’s explore each aspect in detail for 2025.

Understanding Spanish Property Types

The critical factor determining which taxes apply is whether your targeted property is 'new' (from a developer) or 'resale' (previously owned by someone other than the developer).

New-Build Properties

  • Never previously inhabited.
  • Usually acquired directly from a developer or builder.
  • Subject to VAT and Stamp Duty.

Resale (Second-Hand) Properties

  • Previously owned and lived in, excluding developer stock.
  • Acquired from an individual or company other than the original developer.
  • Subject to Transfer Tax instead of VAT.

This distinction shapes your tax burden, so clarify the property’s status with your agent or lawyer before proceeding.

VAT (IVA) on New Homes

Value Added Tax, or IVA (Impuesto sobre el Valor Añadido), applies to new residential properties sold for the first time. As of 2025, the VAT rate remains at 10% of the purchase price for standard residential property throughout most of Spain, with a few notable exceptions.

When Does VAT Apply?

  • Buying a brand new property from a developer or builder.
  • Buying garage spaces and storerooms with the new home (limited to two per property).

Special Cases

  • Commercial properties or plots of land may attract a higher rate (currently 21%).
  • Social housing can have a reduced rate, regionally adjusted (e.g., 4%).

Example Calculation

If you purchase a new apartment in Madrid for €350,000, you owe €35,000 VAT (10%) on top of the purchase price.

VAT on the Balearic and Canary Islands

Balearic Islands (Mallorca, Menorca, Ibiza): Standard IVA rules apply (10%).

Canary Islands: Instead of VAT, the local IGIC (Impuesto General Indirecto Canario) applies at a lower rate (currently 6.5%).

Transfer Tax (ITP) on Resale Properties

For all properties that are not new-builds, you pay the Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, or ITP) instead of VAT. This tax is calculated as a percentage of the property's declared value, and rates vary depending on the region (autonomous community) where the property is located.

General ITP Rates in 2025

For urban properties:

  • Andalusia: 7% (flat rate)
  • Catalonia: 10%
  • Madrid: 6%
  • Valencian Community: 10%
  • Canary Islands: 6.5%
  • Other regions: 6-10%

Rates are sometimes higher for luxury homes, or reduced for young buyers, large families, or individuals with disabilities (check regional policies).

How Is the ITP Calculated?

The tax is generally calculated on the higher of the actual sale price or the reference property value (valor de referencia), determined by Spain’s tax authority. Avoid under-declaring your purchase price to skirt taxes, as fines and recalculations can apply.

Illustration

For a €400,000 resale property in Madrid:

  • ITP = 6% of €400,000 = €24,000

In Catalonia, the same property would incur:

  • ITP = 10% of €400,000 = €40,000

Stamp Duty (AJD): When and How Much?

Stamp Duty (Actos Jurídicos Documentados, AJD) in Spain is a tax on certain formal legal documents, including title deeds for property purchases and most mortgage deeds.

Who Pays AJD?

  • All buyers of new-build properties pay AJD upon notarizing the purchase contract.
  • Resale buyers typically only pay AJD if they contract a mortgage (on the mortgage deed). In most regions, as of recent legal reforms, the bank, not the borrower, pays the AJD on mortgage deeds.

AJD Rates in Different Regions (2025)

  • Madrid: 0.75%
  • Catalonia: 1.5%
  • Andalusia: 1.2%
  • Valencian Community: 1.5%
  • Other regions: 0.5% - 1.5%

Calculation Example

On a €500,000 new home purchase in Andalusia:

  • AJD = 1.2% of €500,000 = €6,000

This sum must be budgeted alongside VAT for new properties.

"Plusvalía" – The Municipal Value Added Tax

Plusvalía Municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) is a local tax on the increase in land value between the previous and current sales. It is calculated by the municipality, based on:

  • The property’s cadastral (rateable) value, as determined by the town hall.
  • The number of years since the last transfer (maximum 20 years).
  • A locally-set coefficient (declining with time) and tax rate (varies by locality).

Responsibility for Payment

  • By law, the seller usually pays plusvalía, but negotiation may place this obligation on the buyer, especially for attractive new-builds or in distressed markets.

Recent Legal Developments

Since November 2021, buyers and sellers can now choose between two calculation formulas, picking whichever produces a lower tax. However, if a property is sold at a loss (compared to its purchase price), there’s no plusvalía tax due.

Typical Amounts

Plusvalía might range from a few hundred euros on small apartments with little land, to several thousand for villas or large city plots. Request an estimate from the selling agent or town hall.

Notary and Land Registry Fees

Although technically not taxes, notary and registry costs are mandatory expenses when purchasing Spanish property.

Notary Fees

The notary authenticates the property deed (“escritura pública de compraventa”). Fees are state-regulated, but can be influenced by price and complexity.

  • Generally: 0.1% - 0.5% of the property price
  • Estimated range: €800 – €2,500 for most homes

Land Registry Fees

Pays for registering your ownership in the Spanish Land Registry (“Registro de la Propiedad”).

  • Typically: 0.1% - 0.3% of property price
  • Estimated range: €400 – €1,500

Allow for higher fees if your purchase involves multiple parties, extensive land, or additional garage/storage annexes.

Regional Variations in Property Taxes

Spain’s 17 autonomous regions have broad powers to set ITP, AJD, and other property tax rates. This diversity means taxes can vary dramatically even on identical properties in different regions. Here are illustrative 2025 rates for several key areas:

Region Transfer Tax (ITP) on Resale Homes Stamp Duty (AJD) on New Homes Comment
Madrid 6% 0.75% Lower rates than elsewhere
Catalonia 10% 1.5% Progression for luxury property
Andalusia 7% (flat) 1.2% Rates simplified since 2021
Valencian Community 10% 1.5% Higher ITP but some rebates
Canary Islands 6.5% 0.75%"> (IGIC, not VAT) Lower than mainland rates for IGIC new builds

Tip: Investigate the region’s rates on the official “Comunidad Autonómica” website, or with a qualified local lawyer.

Reductions and Special Regimes

  • Large families, buyers under 35, and people with disabilities may enjoy reduced tax brackets. Conditions, discount levels, and definitions vary by region.
  • Social housing often attracts lower VAT and AJD rates.

Tax Considerations for Residents vs. Non-Residents

The process of buying property in Spain is almost identical legally for residents and non-residents. Both pay the same purchase taxes (VAT, ITP, AJD, etc.), but certain post-purchase tax and reporting obligations differ:

For Non-Residents

  • You must obtain a foreigner’s tax identification number (NIE).
  • If you rent out your property, Spanish rental income tax is due annually (24% for non-EU/EEA, 19% for EU/EEA citizens).
  • If the property is left vacant, you will pay a small annual “imputed income tax.”
  • Upon selling, non-residents are subject to 3% withholding for Capital Gains Tax.

For Residents

  • Spanish residents declare worldwide income and capital gains each year.
  • May benefit from capital gains tax exemptions if profits are reinvested in a main home.
  • Subject to annual wealth tax (with high exemptions).

Seek specialist advice if you will be resident before or after the property purchase, as this may change your overall tax picture.

A Step-by-Step Breakdown: From Reservation to Keys

Understanding where taxes fit in the Spanish property buying process can help in budgeting and negotiation.

  1. Reservation Deposit: Typically €3,000–€6,000, depending on property price. Secures your intent, refundable if the property is not legally compliant.
  2. Private Contract and Down Payment: Within weeks, you sign a “contrato de arras” or preliminary agreement. At this stage, you pay 10% (minus reservation), which is non-refundable if you withdraw (unless the seller defaults or major title issues emerge).
  3. Due Diligence and Mortgage Arrangements: Your lawyer checks the land registry, debts, licenses, and community charges. If you need financing, the bank will carry out a valuation and formalize the mortgage.
  4. Completion (Escritura de Compraventa): At the notary, you pay the full price, all relevant taxes (VAT/ITP/AJD), and receive the keys and title deed.
  5. Registration and Tax Settlement: You (or typically your legal representative) register your new ownership in the Land Registry and pay the corresponding taxes. Deadlines are tight: usually around 30 working days after signing.
  6. Ongoing Taxes: After purchase, annual property taxes (IBI), estate taxes, and any rental declarations apply.

Tax Planning & Budgeting Tips

To ensure a smooth experience and avoid unwelcome costs:

  • Calculate all costs upfront: Budget for purchase taxes, notary/registry fees, legal expenses, and agent commissions (if any). For most homebuyers, these total 11–15% above the purchase price.
  • Check eligibility for exemptions: Large families, the under-35s, or those with disabilities might pay less.
  • Consult a tax expert: Particularly if you’re a non-resident, anticipate rental income, or plan to resell in the future.
  • Don’t underdeclare: Spanish authorities use the “valor de referencia del Catastro.” Understating the price can lead to penalties and recalculated taxes.
  • Clarify who pays Plusvalía: Read the contract fine print or negotiate responsibility with the seller.
  • Consider inheritance implications: Owning Spanish real estate brings Spanish inheritance and wealth tax obligations. Structures such as holding property through companies or in joint names may have pros and cons; seek legal advice.
  • Remember annual costs: Local rates (IBI), community charges, and insurance must also be budgeted post-purchase.

Frequently Asked Questions

How much are total purchase taxes and costs when buying a home in Spain in 2025?

Expect to pay between 11% and 15% of the purchase price in taxes and fees. For new-builds, that’s typically 10% VAT, 0.5–1.5% AJD, plus notary and registry fees. For resales, ITP (6–10%) replaces VAT, with similar fees added on.

Who pays the Plusvalía (municipal capital gains tax) when buying property in Spain?

Traditionally the seller pays Plusvalía, but it may be shifted to the buyer in contract negotiations—so always check your sales agreement. On new homes, sellers may request buyers cover this cost as an incentive.

Are there any property tax breaks for first-time buyers or young people in 2025?

Many regions offer reduced ITP and AJD rates for buyers under 35, large families, or people with disabilities. These discounts vary significantly and require local application. Check with a regional legal adviser to maximize savings.

Do I need to pay property taxes if I buy off-plan or under construction?

Yes. On completion, you pay VAT and AJD (or IGIC in the Canary Islands) on the full purchase price, once you take possession at the notary. Payment is typically due within 30 days of notarial signing.

Can I finance purchase taxes as part of my Spanish mortgage?

Typically, Spanish mortgage lenders only finance up to 70–80% of the property price, not the total with taxes and fees. You’ll need to fund taxes and costs separately, usually from savings.

What happens if I understate the purchase price?

Spanish tax authorities routinely monitor property transactions. If the declared purchase price is below the “valor de referencia,” expect a recalculation and penalty interest on underpaid tax. Accurate and honest declarations are essential.

Where can I get an exact calculation of my expected taxes?

Your Spanish legal adviser or a reputable property agent can provide a precise breakdown. The local “Oficina de Hacienda” (tax office) also publishes calculators and individual regional rates online.

How are taxes paid? Do I pay them at the notary?

While the full property price and notary fees are paid at the completion meeting, taxes—ITP, VAT, or AJD—are paid within 30 working days at your regional tax authority’s office (or online through approved forms, with lawyer/agent guidance).

What ongoing taxes apply after my Spanish home purchase?

Annual taxes include:

  • IBI (Impuesto sobre Bienes Inmuebles): Local property rates.
  • Imputed income tax: Payable by non-residents for property use if not rented.
  • Rental income tax (if applicable): Declared by all landlords, resident or non-resident.
  • Wealth tax: For high-net-worth individuals (regional thresholds and deductions apply).

Does Brexit or my country of origin affect the taxes I pay when buying in Spain?

The purchase taxes (VAT/ITP/AJD) are the same for all nationalities. Brexit does, however, impact annual property ownership and rental taxation for UK citizens compared to EU residents: non-EU owners may face higher annual rates and fewer allowable deductions.

Do I need a tax identification number to buy property in Spain?

Yes. All buyers, resident or not, must obtain a Spanish NIE (Número de Identificación de Extranjero) before completion at the notary. Your lawyer or agent can help you acquire this document ahead of time.

Conclusion: Navigating Spanish Property Taxes in 2025

Understanding the taxes when buying a home in Spain in 2025 is essential to ensuring your property dream doesn't become a financial nightmare. The key takeaways are:

  • New-builds attract VAT (10%) + AJD + notary/registry fees.
  • Resale properties are subject to Transfer Tax (6–10% depending on region) + notary/registry fees.
  • Don't overlook Plusvalía municipal and annual taxes post-purchase.
  • Regional differences can substantially impact your tax bill—always check local rules.
  • Both residents and non-residents have important tax obligations (and rights).

Work with reputable agents, a qualified Spanish property lawyer, and, if needed, an international tax consultant for tailored advice. Careful planning will help you enjoy your piece of Spanish sunshine while keeping fiscal clouds at bay.

Disclaimer: This article provides general information on property taxes in Spain as of 2025. Individual circumstances vary, and property law evolves—always seek up-to-date professional advice and consult original sources for regional specifics.

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