Many people forget about the incidental costs which may vary from case to case. KARMA IMMOBILIEN helps you find out which incidental costs you will have to be aware of.

Transfer tax

Buying property in Spain some taxes are obligatory.

1. There are the Spanish VAT (IVA – Impuesto sobre el Valor Añadido) or the transfer tax (ITP – Impuesto sobre Transmisiones Patrimoniales) which basically is like “Grunderwerbssteuer” in germany.
2. Buying a property from a company carries IVA. Important: the vendor’s invoice has to contain the IVA. There a two IVA tax rates: the general one (21%) and the reduced tax rate (10%)

Which of these two tax rates is applicable:

• 21 % general IVA is due buying undeveloped land
• 10 % reduced IVA is due buying flats and houses

In addition to IVA you’ll have to pay 1,2% document tax (AJD – Actos Jurídicos Documentados)

Buying from persons (not companies) causes ITP (see above)

ITP tax rates for balearic properties are:

below 400.000 €: 8% of the price
from 400.000,01 € to 600.000 €: 9% of the price
from 600.000,01 €: 10% of the price

Withholding tax of the vendor (retención)

As a non-resident vendor you have to pay 3% of the price as prepayment to the tax office. This way even a non-resident vendor has to claim this income as sufficient taxable profit.

Land Appreciation Tax (plus valía)

Land appreciation tax taxes the value increase of the property (not the buildings) since the last transfer. Speaking condominiums this tax is not much, obviously. The amount of the tax is defined by public administration. It is recommended to gain information on the exact amount from public administration before buying properties. Even though the vendor has to pay this tax, there have been attempts to make the vendor pay for it. An agreement on this should be part of every sales contract.

Newly buyers are obliged to present a copy of the sales contract to public administration because the buyer is liable for this tax in case the vendor does not pay for it. So, as a buyer, you should withhold the “plus-valía” from the payment.

Notary and land register costs

There is a fees regulation for notary and land register costs, which is paired to the value of the property and normally sums up to 1% of the price.