Understanding VAT (IVA) When Buying Property in Spain
If you’re planning to buy a home in Spain, it’s essential to understand how VAT (known in Spain as IVA) applies — and when it doesn’t. Here’s a breakdown of what to expect:
When Do You Pay VAT on a Property?
VAT is only charged when purchasing new properties directly from a developer or builder. This includes newly built homes that have not been previously inhabited.
However, if you’re buying a resale (second-hand) property, you will not pay VAT — instead, the transaction is subject to a transfer tax (ITP), which varies by region (in Andalusia, it’s generally between 7–10%).
How Much VAT Will You Pay?
- 10% VAT is the standard rate for residential property purchases from a developer.
- In special cases, such as subsidised housing (vivienda de protección oficial or VPO), the VAT may be reduced to 4% — but this applies only to eligible buyers and properties under official protection schemes.
In addition, if you’re buying a plot of land, commercial property, or a garage space that isn’t sold with the home, a 21% VAT rate may apply.
How Is VAT Paid?
VAT is not paid separately to the government — it is included in the final purchase price and paid to the developer at the time of signing the deed (escritura pública). Your notary will ensure this is processed correctly.
Keep in mind that this amount is in addition to other purchase costs, such as legal fees, notary fees, registration, and possibly mortgage-related costs.
Don’t Go It Alone
Spanish tax regulations can be complex — especially if you’re not a resident or are investing through a company structure. Always consult a professional tax advisor or gestor who can review your specific case and provide tailored advice.
📌 The information provided here is general and for reference only. Please consult a licensed professional before making any financial decisions.
Looking to buy in Alcaidesa or nearby?
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Source: Infobae