If you are going to buy a second home in Spain, additional costs and taxes will be involved. What additional costs should you take into account? An overview!

Buying a new house in Spain

If you are going to buy a second home in Spain, you will have to pay purchase taxes in addition to the purchase price. If it is a new build property, you will have to pay 10% Spanish VAT (IVA) and a tax for notarization (IAJD). This tax depends regionally and is between 0.5% and 1.5% of the purchase price.

Purchase of existing property

If you are going to buy an existing vacation home in Spain, you will have to pay Spanish transfer tax (ITP). This also varies regionally and ranges between 8% and 11%. If ITP is due, you should not pay IAJD because Spanish VAT (IVA) and Spanish transfer tax (ITP) cannot apply at the same time.

Registration tax on second home

In addition to VAT or transfer tax, a registration tax is also charged when buying a house in Spain. This serves to reimburse the notary for registering the house in the Spanish land register. The amount varies from region to region. Usually you should count on several hundred euros.

Mortgage

If you borrow (part of) the purchase price from the bank, the bank will usually ask you to take out a mortgage on the property. When you register a mortgage, you have to pay a tax (IAJD). This applies to both a new and existing home. It is important to note that the IAJD is calculated on the amount of security given to the bank, not on the value of the home or the amount of the loan. Because the security contains additional costs (e.g. unpaid interest) this amount is higher than the loan (up to 1.5 times). Recently a judge in Spain ruled that the mortgage tax should not be paid by the client but by the bank itself. We are waiting for a final ruling on this but for now this IAJD is therefore not for the buyer’s account.