When purchasing property in Spain, you typically pay 10% in acquisition costs, which is higher than in many other EU countries. Costs for new Spanish properties are slightly higher than for resale properties (e.g., an additional 1% or 1.5%). Most fees are based on the declared value of the Spanish property, which is often significantly lower than the actual purchase price.
Under the Public Charges Act of 1989, it is no longer possible to declare a very low figure, and there are heavy penalties for underestimating the total value of a property. Local governments use maintenance tables to calculate the fiscal value of a property, which is the value at which the house should be declared.
However, if you have purchased a property at a bargain price, the wisest course of action is to declare the market value rather than the purchase value. In any case, tax authorities still reserve the right to reassess the taxable property value. It is widely understood that the figure in the deed of sale should be 1.6 times the fiscal value (still far below the actual sale price) and in no case less than 20% of the sale price.
If the tax office finds that the declared value is lower than their valuation, they can charge an additional 6% fee, plus administrative costs. If the deed declaration is 12% or 20% below market value, the buyer may be taxed based on the difference between the declared value and the authority's estimated value, as if it were a gift.
If your estimated property price is 50% lower than the official valuation, the authorities also have the right to purchase the property at the lower valuation within two years. Price declaration is now common, but declaring too low carries risks. Revaluation can be carried out within 4 years and 6 months after the purchase. If a property is revalued, the revaluation must be specified by a builder or surveyor, who must provide an estimate and explain the reasons for the appreciation. If you disagree with the estimate, you can file a protest, which must be done within a limited time (usually one month).
Fees payable for purchasing Spanish property include:
1. Transfer Tax (resale properties only)
2. Value Added Tax (new properties only)
3. Stamp Duty (new properties only)
4. Land Tax
5. Notary Fees
6. Legal Consultation Fees
7. Deed Registration Fees
8. Surveying Fees (optional)
9. Sales Agency Fees
10. Utility Fees
Most taxes are paid by the buyer, with the exception of land tax and sales agency fees. However, the contract may stipulate that the buyer bears all costs, including land tax. This is legal as long as the buyer agrees, as the law simply states that when costs are not specified in the contract, they are shared, and who pays what is usually a matter of negotiation. Before signing a Spanish property purchase contract, it is essential to ensure you know what all the costs are.
