Guides / Tax guide

Property taxes in COSTA DEL SOL and Spain

Who pays taxes? When are taxes paid? What other costs do you face when you buy, sell, or own a home on the Costa del Sol.

01: Taxes and Purchase Costs of a Property on the Costa del Sol

We will discuss all the purchase costs a buyer has to pay when purchasing any property on the Costa del Sol.

The main difference lies in the purchase of a new home from a developer or a second-hand home.

Properties bought from developers are subject to VAT (10%) and the documented legal acts tax (1.2%) in addition to the purchase price. VAT must be paid on the day of purchase at the notary.
Second-hand properties are only subject to the transfer tax (7%). The transfer tax can be paid up to 30 days after signing at the notary.
So, for now, we can already see a big difference in taxes when buying from a developer or a private individual who lived in the house.

WHAT ARE THE OTHER COSTS OF BUYING A PROPERTY ON THE COSTA DEL SOL, SPAIN?

The remaining costs are the same for both new and second-hand properties and are:

Lawyers’ fees.

For a simple transaction, the lawyers’ fees are 1% (+VAT) of the purchase price. If the purchase is for a high price or you are a regular client, some law firms may slightly adjust the fees.

Notary and registry fees.

These depend on many factors and are always estimated approximately.

Bank fees for transferring funds to the seller or issuing bank drafts.

Almost all purchases at the notary are made with bank checks, not transfers, and for issuing these checks, or making a significant transfer, banks charge a fee. This can vary a lot depending on the amount.

Mortgage fees.

If you decide to buy a property on the Costa del Sol using bank financing, you might be surprised to find that your only cost will be the property valuation. This varies from €500 to over €2,000 depending on the size of the property. The rest of the costs and taxes are paid by the bank.

Technical due diligence.

It is not mandatory at all, but it is good to keep in mind when buying a second-hand home. To check the current state of facilities like air conditioning, heating system, and other details in the property. The cost can range from 300 euros to over 2,000 euros, depending on the size of the property.

02: Property taxes for owners on the Costa del Sol.

WHAT ANNUAL TAXES MUST BE PAID WHEN OWNING A PROPERTY ON the Costa del Sol

We will analyze the taxes that must be paid annually after purchasing a property on the Costa del Sol.

All these taxes and costs are paid annually. They are calculated based on the purchase price, the location of the property (municipality), its size, and cadastral value. To make it easier, we will separate it into two different parts. First, the taxes related to the property owner, and second, the taxes related to the property itself.

Taxes related to the owner:

Non-resident taxes

This tax must be paid, no matter if you rent out your property or not. The fact of owning a property in Spain as a non-resident already implies that you have to pay it annually. The tax authority does not follow up on these tax payments. It checks whether you have paid the tax when you sell your property. So theoretically, you can leave it for later, although this payment will also increase with interest and other costs for not paying on time.

Wealth tax

Essentially, Spain has a wealth tax, but the regional government of Andalusia opted to suspend it to encourage more investment in the region. Subsequently, the national Government introduced a new tax known as the solidarity tax. Initially, this tax was supposed to be temporary, applying only during the years 2022 and 2023. However, with the Government’s re-election, it is very likely that it will be extended.

• The tax applies to net assets over 3 million.
• Only the net purchase amount is taken into account.
• The amount depends on whether you are a resident, a non-resident, or if a company is buying.

Taxes and expenses related to the property you own in Marbella.

IBI (Real Estate Tax).

It is paid annually, just like other taxes. Typically, this tax ranges between 1,000€ and 10,000€, but it can be lower or higher, depending on the property. It depends on the cadastral value of the property and the municipality.

Garbage fee.

The property’s waste collection tax, but it is a very small amount, usually less than 200€, depending on the property.

Community fees.

Normally, community fees range from 200 euros to 1,000 euros, with some exceptions. It is not a tax, but a cost directly related to the property that you are obliged to pay. Failure to pay can even result in the property being seized (after a long time). Villas and plots also usually form part of a community. It is rare to find properties that are not part of any community and, therefore, do not have these expenses.

Other permanent costs.

Electricity and water are paid monthly with a permanent contract. A minimum fixed amount must be paid, even if there is no consumption, although the main part of the bill is directly related to the consumption you make.

Are you thinking about selling your property? Or maybe buying it? It has never been easier. LV Real Estate helps you through the entire process, get in touch with us.