Understanding Property Taxes in Andalucía: A Comprehensive Guide
What taxes are paid when you buy a property in Andalucía? And the taxes once you become the legal owner?
Before buying a property, it is crucial to be aware of the expenses you will have to face. These costs can reach almost 10% of the purchase price in most cases. Expenses and taxes can vary, whether you are buying from a developer or in the case of resales. Additionally, tax rates differ depending on the autonomous community.
Taxes Related to the Purchase Procedure
In Andalucía, the taxes involved are as follows:
1. Transfer Tax (ITP): This tax is applicable in case of resales. The current rates applied are:
- General Rate: For taxable events accruing from April 28, 2021, a rate of 7% is applied.
- Rental General Rate: From January 1, 2022, the general rate for leases is 0.3%. For taxable events before this date, the state regulations apply.
Reduced Rates: For taxable events accruing from October 27, 2021:
- 6%: On the transfer of a property intended for habitual residence if the value does not exceed 150,000 euros.
- 3.5%: On the transfer of a property intended for habitual residence if the value does not exceed 150,000 euros, and the buyer is under 35 years old, a victim of domestic violence, a victim of terrorism, or purchasing in a municipality with depopulation issues.
- 3.5%: On the transfer of a property intended for habitual residence if the value does not exceed 250,000 euros, and the buyer is legally considered disabled with a degree of 33% or more, or is a member of a large family (and the property is intended as the family’s habitual residence).
- 2%: On the acquisition of a property for resale by an individual or legal entity engaged in a business activity governed by the regulations adapting the General Plan of the Real Estate Sector.
- 2%: On certain transactions involving mutual guarantee societies (SGR) or public sector commercial companies at the state or Andalusian level whose purpose is to provide guarantees.
2. VAT and Stamp Duty Tax: These taxes are applicable when acquiring a new property from a promoter or developer.
- VAT: 10% on the purchase price. For social housing, the VAT is 4%. The VAT is paid to the seller, who will then pay this tax to the Inland Revenue.
- Stamp Duty Tax: For taxable events accruing from April 28, 2021, the general rate is 1.2%. Reduced rates for taxable events accruing from October 27, 2021, are as follows:
- 1%: On the transfer of a property intended for habitual residence if the value does not exceed 150,000 euros.
- 0.3%: On the transfer of a property intended for habitual residence if the value does not exceed 150,000 euros, and the buyer is under 35 years old, a victim of domestic violence, a victim of terrorism, or purchasing in a municipality with depopulation issues.
- 0.1%: On the transfer of a property intended for habitual residence if the value does not exceed 250,000 euros, and the buyer is legally considered disabled with a degree of 33% or more, or is a member of a large family (and the property is intended as the family’s habitual residence).
- 0.1%: For certain transactions involving mutual guarantee societies (SGR) or public sector commercial companies at the state or Andalusian level whose purpose is to provide guarantees.
Other Costs Related to the Property
Typically, when buying a property, a purchase title deed is signed before a notary and subsequently registered at the Land Registry. Although not compulsory by law, it is highly recommended. Notary and registry expenses are always paid by the purchasers.
Notary Fees: The cost is regulated and depends on the purchase price. Additional factors include the number of pages and copies. The fees range from 400 euros to 1.000 euros.
Land Registry Fees: These also depend on the purchase price and are fixed by law, ranging from 300 euros to 800 euros.
Taxes Related to Ownership
IBI Tax: Equivalent to the Council Tax, this is a tax on ownership and real rights annexed to the property. The amount depends on:
- The build size of the property.
- The classification of the land.
- The plot size.
- The proximity to services and infrastructure.
The Local Town Hall (Ayuntamiento) assigns a “cadastral value” (taxable value), and the tax is paid yearly, sometimes in two terms. It is important to check if the seller has paid the Council Tax before buying, as the Inland Revenue can pursue outstanding debt from the last four years against the property.
Contact us for further information.
By understanding these taxes and expenses, you can better prepare for the financial aspects of purchasing and owning property in Andalucía.