What Is ITP and IVA When Buying Property in Spain?

Wiki Article

If you're thinking about buying a property in Spain, you’ll likely come across the terms ITP and IVA. At first glance, they might sound like confusing jargon, but they’re actually just two different types of taxes that come into play depending on the kind of property you're buying.

Let’s start with ITP, which stands for “Impuesto de Transmisiones Patrimoniales.” In simple terms, this is a transfer tax paid when you buy a second-hand (or previously owned) property. The percentage you pay depends on which part of Spain the property is in. Most regions charge around 6% to 10% of the purchase price. For example, if you're buying a resale home, this is the tax you’ll be dealing with.

On the other hand, IVA, or Value Added Tax, applies if you're buying a brand-new property directly from a developer. In this case, instead of paying ITP, you pay IVA. For residential properties, the usual rate is 10% of the property price. There’s also a smaller additional tax called AJD (Stamp Duty), which is usually about 1% to 1.5%, depending on the area.

So how do you know which one applies? It’s fairly easy: if the property has had a previous owner, you pay ITP. If it's brand new and you're the first buyer, then you pay IVA and AJD.

One thing to keep in mind is these taxes are separate from other costs like notary fees, lawyer fees, and registry costs. So, it’s a good idea to add around 10% to 15% on top of the purchase price to cover all extra expenses.

Paying the correct tax is really important if you want everything sorted legally and smoothly. It’s common to get help from a local lawyer or advisor who knows the rules and can make sure you’re doing everything right. While you don’t need to be an expert in Spanish tax law, knowing the basic difference between ITP and IVA can help prevent surprises during the property buying process.

Having a clear picture of these taxes can make the buying process feel a bit less stressful. It’s all about being prepared so you can focus on finding the perfect place to enjoy the Spanish sun.