Costs and taxes to buy or sell a house in Ibiza
Costs and taxes when buying property in Ibiza.
The cost and taxes on top of the purchase price in Ibiza are about 12-13%. Please see below how these cost and taxes are presented:
I.Taxes on property transfers (ITP)– Impuesto sobre Transmisiones Patrimoniales
When you buy a resale/used property from a private person in Ibiza, you pay ITP tax, starting at 8% – 11%. These taxes are state taxes and they are collected by the Autonomous Community, the Balearic Islands. The taxes are calculated according to the total value of the property being sold.
ITP is similar to UK Stamp Duty and only applied to the purchase of resale / used properties. For a new property, a 10% rate taxes is applied plus associated legal taxes meaning a buyer of a new build property will have to pay 11.2%.
Up to €400.000 8%
Over €400.001 till €600.000 9%
Over €600.001 till €1.000.000 10%
Over €1.000.001 11%
II.Taxes on property transfers VAT (IVA)– Impuesto sobre el Valor Añadido
When you buy a new build house /villa/ apartment from a developer in Ibiza you pay VAT (IVA, Impuesto sobre el Valor Añadido) and Stamp Duty (AJD, Actos Juridicos Documentados). The IVA is (Valued Added Tax) VAT.
At present, the VAT is 10% on the purchase price of residential properties( apartments, houses, villas, etc). The Stamp Duty is 1,2% of the purchase price. On plots and land, the tax rate is 21% VAT or 8-11% ITP which depends if you buy from a company or private person.
III. Local taxes (IBI) – Impuesto sobre Bienes Inmuebles
IBI tax is determined by the value calculated by the town hall. This tax has to be paid every year by the owners of the property. The value cadastral is normally much lower than the real market value of the property. Once the property is registered on the new owner(s) name, the tax is payable.
IIII. Other costs
Mortgage costs in Ibiza
If you are planning to buy your property using a mortgage, you will have an additional cost and a stamp duty tax (1,2%). There is the cost for making the property valuation ( approx. 500 Euro) plus the cost of the mortgage itself. The maximum loan for lenders who are non-tax paying residents of Spain is normally to 60%-70% with a Spanish bank.
Lawyer fees in Ibiza
Lawyer fees are usually between 1% of the purchase price and it’s always advisable for the buyer to use a lawyer for the due diligence. We always advise using a lawyer established in Ibiza to buy property in Ibiza.
Notary cost in Ibiza
These costs are always paid by the buyer and are usually not more than 2000 euros maximum.
Property registration cost in Ibiza
Cost related to the owner’s registration and the land registration needs to be paid by the buyer and are calculated in relation to the purchase price, normally it is around 1%. The time for registration must be within two months after signing the Public Deed.
Community fees in Ibiza
When purchasing a house in secured urbanization or an apartment in a community. Then monthly or every three months fees have to pay according to the expenses of the maintenance of the community.
Agency fees in Ibiza
The fees of the agency are paid by the seller unless otherwise agreed. In Spain / Ibiza, it is accustomed that there is a real estate agent involved between the seller and buyer. Just like a good referee from a soccer match the real estate agency has to take care of the interest of both parties.
Costs and taxes when selling a property in Ibiza:
Spanish Income Tax on Real Estate (Impuesto Sobre las Ganancias Patrimoniales)
Real estate income tax must be paid on the profit from the sale of a property. The tax rate for residents is: 21% of the profit up to 6,000 euros 25% for amounts between 6,001 and 24,000 euros 27% for income above 24,001 euros. For non-residents the rate is 21%, without taking into account possible double taxation agreements. It’s advisable to use the services of a tax expert as there are a number of tax deductible expenses – for example, if the property was purchased before 1986.
Municipal capital gains tax in Ibiza (plusvalía municipal)
This is a tax on the increase in value of land that occurs when a property is sold. By law, it’s the seller who pays this tax, although it can be passed on to the buyer if this is agreed in the contract. The amount of this increase in value depends, among other things, on the area of the land and the length of time it has belonged to the seller.