There are various costs and taxes in addition to the initial property price that buyers must pay when purchasing a home in Spain. In Ibiza the approximate cost is 12% of the property’s purchase price, including taxes and mandatory additional charges. These varying costs are broken down and briefly explained below.
I. Taxes on asset transfers (ITP) – Impuesto sobre Transmisiones Patrimoniales
When buying a property, you pay an ITP tax (starting at 8%) or IVA (10%) depending on whether the property is purchased second-hand or new. These are state taxes, however they are also collected by the regional Autonomous Communities such as the Balearic Islands. It is the buyer who must pay the tax on asset transfers, calculated according to the total value of the property being sold.
Impuesto sobre Transmisiones Patrimoniales (ITP) is paid when a new person acquires a second-hand property. However, Impuesto sobre el Valor Añadido (IVA) is a valued added tax (like VAT) applied to new buildings– more specifically, when the property is bought directly from the developer.
Tax rates increase progressively from 8% to 10%.
II. Local property taxes (IBI) – Impuesto sobre Bienes Inmuebles
This tax is set by the town hall (Ayuntamiento) in the area of residence and is calculated on the basis of the rental value (Valor Catastral) of the property. This tax is payable by the owner of the property once in his or her name.
The seller is required to present the last receipt for the payment of the tax (IBI) to the notary or to your lawyer prior to signing the Escritura.
III. Additional costs
Buyers who opt for a mortgage have additional costs to cover. There are the costs to determine the property value (approximately 500€) plus the costs related to the mortgage itself. These vary depending on the lender but are approximately 1%.
Legal fees are usually between 1% and 2% (including VAT) and it is always advisable to use an independent lawyer.
These expenses are always paid by the buyer and are usually between 0.5% and 1% of the purchase price declared in the deeds of sale.
Expenses related to inscribing the sale with the land registry are almost always paid for by the buyer and are calculated in relation to the purchase price declared on the deeds of sale – generally around 1%.
Buyers should note that according to the law there are certain time limits for the registration of changes in ownership of property. The limit is two months after the signing of the Escritura. The same time limit applies to the registration of new buildings or renovations from the signing of the Escritura de obra nueva.
To pay for your property in Ibiza, you will usually be required to present a bankers’ cheque. In order to do this, you will need to set up a Spanish bank account and transfer the funds from your home country.
Fees vary between 2% and 6% but standard market practice is 5% of the property’s purchase price (excluding VAT) in Ibiza. These fees are payable by the seller, unless otherwise agreed.