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legalidades y estilo de vida
Costs and Taxes Related to Buying a Property in Ibiza
In a previous post we spoke about the “3 steps of buying a house in Ibiza”. This time we will look at the real costs related to buying a property in Ibiza.
When you buy a property in Ibiza, you need to consider that over and above the property price, you must pay several costs and taxes. We can safely say that the estimate cost for purchasing an Ibiza property is between 9% and 12% of the property’s purchase price, including taxes and obligatory additional charges. These costs are broken down as follows:
1. Transfer Tax
When buying a property in Ibiza, there is a state tax you must pay, whether you buy a new build property or an existing one.
- If you buy a second-hand property you must pay the Impuesto sobre Transmisiones Patrimoniales (ITP, starting at 8%)
- When buying a new build property, you must pay the Impuesto sobre el Valor Añadido (IVA, starting at 10%)
In both cases, it’s the buyer who must pay the tax on property transfers, calculated according to the total value of the property being sold.
2. Local Property Tax
This tax is similar to the council tax in the UK and it’s called Impuesto sobre Bienes Inmuebles (IBI). It’s a local tax raised by the Town Hall (Ayuntamiento) where the property is registered.
The tax base is calculated with regards to the Catastral value of the property (Valor Catastral). The tax rate varies depending on the size of the municipality where the property is located. The total amount charged is the property catastral value multiplied by the tax rate. If you buy a property in Ibiza, you will have to pay this tax only once the property has been register to your name.
If you buy an existing property, before signing the Escritura, the seller is obliged to present the last receipt for the payment of rates (IBI) to the notary or your lawyer. Bear in mind that your lawyer should also obtain a certificate from the Local Rates office (Racaudacion Provincial) to confirm that all rates have been paid. In the eventuality that the IBI has not bee paid by the previous owner, the local town hall may charge unpaid IBI for up to a maximum of five years in arrears, with penalties of up to 20% for late payment.
3. Other costs
When buying a property you will incur in many other external costs, some bigger than others. These expenses will include agency and legal fees, notary expenses, the property registration, if you choose to buy with a mortgage this will add extra costs too. Don’t forget about the bank cost to set up a Spanish bank account and transfer the funds across from your home country bank account, plus eventually the Income Tax Provision if you buy from a non-resident.
For more information on how we can help during the buying process, visit our Service Page.
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