Either you’ve found a wonderful new home or lot or you are still looking for that right property? In either case you’ll want to know what type of costs are involved with the purchase of real estate in Ibiza and how high these costs are.
In general, you can budget for approximately 11% to 14% depending on the value of the property and whether or not you require a mortgage. We will explain this further in detail below.
Transfer tax or IVA?In most countries, the buyer pays for the transaction fees for real estate, and this is also the case in Spain. However, depending on the type of real estate (e.g. new construction, resale home/flat or a construction plot) you either pay IVA, which is considered the Spanish Sales Tax or you pay a transfer tax called ITP (Impuesto sobre Transmisiones Patrimoniales).
Resale property If you purchase an existing villa or apartment (i.e. you are not the first occupant) the purchase is subject to Transfer Tax called ITP. The transfer tax is calculated on the purchase price in the following way
- The first EURO 400.000- is subject to 8% transfer tax;
- The value between EURO 400.000 and 600.000 is subject to 9% transfer tax
- The value between EURO 600.000 and 1,000.000 is subject to 10% transfer tax
- The value between EURO 1,000.001 and 2,000.000 is subject to 12% transfer tax
- The value above EURO 2,000.001 is subject to 13% transfer tax
For example: If you purchase an existing property in Ibiza worth EURO 850.000 – you would have to pay the following transfer tax:
EURO 400.000 x 8% = EURO 32.000
EURO 200.000 x 9% = EURO 18.000
EURO 250.000 x 10% = EURO 25.000
Total payable transfer tax = EURO 75.000-
New constructionIf you purchase new construction in Ibiza directly from a developer with a newly issued property deed you must pay 10% IVA (sales tax) instead of transfer tax. The new and finished property must be registered and another 1.5% tax is due upon registration.
Plot of landShould you purchase vacant land you are required to pay 21% IVA instead of transfer tax. Please note that any property under construction is subject to 21% IVA as well.
Notary and land registration feesThe deed of transfer is signed by the public notary and registered in the Land Registration of Ibiza (Registro de la Propiedad). The fee for the notary and the registration varies between 1.5% and 3% of the purchase price depending on the price listed in the deed of transfer.
Lawyer feesAs we explained in our buyers guide (click here) you must enlist the services of a lawyer or Gestor to assist during the purchasing process to ensure all legal matters are carried out correctly and all documents are in place. Lawyers in Ibiza charge up to 1% of the purchase price for their services.
Mortgage feesIf you require a mortgage, the bank will cover the legal part of the purchase, meaning you will not need to obtain a lawyer. However the bank will charge you for this service amongst other costs. Normally the total additional expenses for the mortgage amounts to up to 3% of the mortgage value.
Mortgages are taxes at approx. 1%-1.5%, and most banks charge an arrangement (lawyer) fee between 1% and 1.5%. Banks also require a property valuation report, which on average costs EURO 500.
The mortgage must be registered by the notary office, which means the notary will charge an additional 1% for their services.
Buying from a non-residentIf you purchase your Ibiza real estate from a non-resident you are required to subtract 3% from the purchase price and pay it to the Spanish Tax Office within 30 days of the transaction. The payment, a type of deposit, is a ‘guarantee’ against the seller trying to avoid paying capital gains and other taxes. Provided you pay this to the tax authorities within 30 days, you cannot be pursued for capital gains tax (CGT) even if the seller’s liability was greater than the 3% deducted.
If you, as the buyer, fail to subtract and pay the 3%, you are liable to pay any Capital Gains Tax due on the sale and could also be fined.
A resident should have a certificate declaring that he or she is a tax resident of Spain. Please ensure with your lawyer and the notary whether or not you are buying from a resident.
DisclaimerThe information above is merely indicative, all fees are determined by the related parties. For more information please consult your real estate agent or legal counsellor.
