fees and taxes

There are several taxes and fees payable on all property transfers in Spain. The Notary charges a substantial fee for preparing the escritura (title deed) and a further fee for registering the property at the registro de la propiedad in the purchaser’s name. These are in addition to conveyancing fees charged by your representative.

There is a document tax of 0.5% on all transactions, plus i.g.i.c / i.v.a (VAT.) which is at present 5% in the Canary Islands when purchasing a new property from a developer, or a 6.5% transfer tax if you are purchasing a resale property from a private seller. The taxes paid are calculated on the officially declared sales/purchase price. There is a further tax known as plus valia (land valuation tax), which is levied at various rates according to the local council based on the annual increase in value since the previous sale. Your representative will be able to offer more guidance on an individual case basis. The tax is usually a tiny proportion of the overall agreement.

Strictly speaking under the law, the seller is liable to pay the plus valia tax but in normal practice the purchaser actually pays all fees and taxes as per the purchase and sale agreement in the transfer of a property. The fees and transfer taxes are payable soon after the escritura is signed, but however the plus valia tax is often not payable until some considerable time later at which point the seller may be long departed. This tax (plus valia) is levied against the property, which means that if the seller fails to pay or cannot be found, then the purchaser (as the new owner of the property upon which it is levied) will eventually be liable for this tax anyway.

There are many factors that alter the calculations for these fees and taxes, but generally it is sensible to allow 8% to 10% of the actual purchase price in your budget. Your representative will be better equipped to advise on a case by case basis.

Another fee for consideration is that of your chosen representative, and this will generally depend on how much time and work is involved in any individual purchase. These fees can vary greatly between one representative and another. Take advice from your agent to recommend a fixed fee representative with whom they have experience. In extreme cases an estimate may be required if complicated issues arise during a purchase.