Buying a home is one of the most significant decisions in a person’s life. Beyond the initial cost of the home, there are a number of homebuyer taxes and additional fees that future homeowners must consider. If you are considering buying a property, it is essential that you are informed about the taxes for buying a house to avoid surprises. Below, we detail the taxes to avoid surprises. Here are the most relevant taxes for buying a house.
Tax rates for buying a house
Transfer Taxes (ITP)
ITP is one of the most common taxes for buying a house when purchasing a second-hand property. The fee varies according to the autonomous community in which you are located, but generally ranges between 6% and 10% of the value of the house. It is essential that you check the current rate in your community to accurately estimate this expense.
Value added tax (VAT)
If you are buying a new home directly from the developer, you will not pay ITP, but you will be subject to VAT. In Spain, VAT for new homes is 10%. In addition, in the case of garages and annexes attached to the dwelling, this tax also applies, albeit with some exceptions.
Stamp Duty Tax (AJD)
This tax applies to both new and used dwellings and is levied on the formalisation of the notarial deed. The fee varies according to the autonomous community and can range from 0.5% to 1.5% of the purchase price or the guaranteed value.
Municipal capital gains
This is a tax levied on the increase in the value of the land of the property over time. The amount to be paid is calculated according to the number of years the seller has owned the property and the cadastral value of the land. In many cases, this tax is borne by the seller, but it is something that can be negotiated between the two parties.
Notary and registration fees
Although they are not taxes per se, they are expenses associated with the purchase of a home. The notary charges for drawing up and authorising the public deed of sale, while the Land Registry charges for registering the deed.
Recommendations for the buyer
The most common tips commonly recommended to homebuyers include the following:
- Do your research and get advice: Before you buy, research all applicable taxes and fees in your autonomous community. It is advisable to enlist the help of an expert, such as a real estate manager or lawyer.
- Plan your budget: Don’t just look at the price of the house. Add up all taxes and additional expenses to get an idea of the total cost of the property.
- Negotiate with the seller: Sometimes it is possible to agree who will bear certain taxes or costs, such as the municipal capital gains tax.
In conclusion, buying a house is a complex process and can be costly, but being informed about the taxes involved will allow you to face this challenge with greater security and confidence. Remember that proper planning and advice are key to ensuring a successful purchase without unexpected financial surprises. In Edward Estate as a real estate agency in Frigiliana we advise you throughout the process of buying your home.