Spanish property taxes
In Spain property transactions are taxed in two different ways:
1. VAT (IVA) and Legal Acts Tax (IAJD)
2. Transfer TAX (ITP)
VAT (IVA) and Legal Acts Tax (IAJD)
VAT and Legal Acts Tax are charged in when the hand-over of assets is carried out by professional parties, where the property is linked to their Business or professional activity. The VAT is paid by the seller of the assets, the legal acts tax is paid by the buyer.
VAT rate is 21% or 10% the Legal acts tax rate is 1.2%.
Examples of transactions subject to VAT and Legal acts tax:
Urban plot sales (with or without license) by a professional party, with no construction or under construction (not finished) are subject to 21% VAT.
Rural plot sales with a building license by a professional party, with no construction or under construction (not finished) are subject to 21% VAT.
Plot sales by professional parties with construction going on, where the professional party that is selling the plot remains the party that constructs the property are subject to 10% VAT.
Finished property sales by professional parties. These are first sales and subject to 10% VAT.
Legal acts tax is in all cases 1.2%.
VAT to state tax office. Legal acts tax is paid to the Balearic Islands tax office.
Transfer Tax (ITP)
Transfer tax is charged when the hand-over of assets is not subject to VAT or is exempt of VAT. The transfer tax is paid by the buyer of the asset.
The transfer tax various from 8% to 11% for properties and 4% on furniture.
Examples of transactions subject to Transfer Tax:
Plot (urban and rural) sales with or without a license by a private person.
Rural plot sales without a license by a professional party.
Second hand sale of a property by a private or professional party.
Transfer tax is paid to the regional tax office of the region where the property transfers ownership and the rates vary per region. For the Balearics the rates are:
8% - For properties up to €400,000
9% - For properties up €400,000.01-€600,000 10% - For properties more than €600,000.01