How much VAT is paid when buying a house in 2022?
The acquisition of a new construction home implies the obligation for the buyer to assume the payment of VAT.
When buying a new-build home, keep in mind that the final amount to be paid is calculated by adding the expenses associated with the purchase of the property, including taxes, to the purchase price. In this case, the future owner has to pay the value added tax (VAT) and the tax on documented legal acts (AJD), the latter being the responsibility of the autonomous communities.
In which cases is VAT paid on the purchase of a home?
According to the Tax Agency, new construction homes are those that are acquired from the developer when the construction or rehabilitation is finished. However, when paying VAT, there is an exception: if the home has been continuously inhabited for a period equal to or greater than two years by people other than the buyers, it is no longer considered a new or existing home. first installment, with which the future owner should pay the property transfer tax (ITP). In the event that the buyer is the tenant, he must pay VAT.
How much is VAT on the purchase of a home?
Currently, the sale of a property is taxed at the reduced rate of 10% of the total deeded value. In the case of official protection housing (VPO), VAT is 4%, although it may vary depending on the autonomous community in which it is located.
Likewise, 10% VAT is applied to the purchase of parking spaces (with a maximum of two units for new-build housing, after which VAT becomes 21%) and annexes such as storage rooms.
For example, when applying 10% VAT to the average price of a home in Spain, around 220,000 euros, the amount to be paid will be 22,000 euros. In the case of a VPO, in which a rate of 4% is applied, the buyer will have to pay 8,800 euros of VAT.
The only exception to this 10% rate is if the home is purchased in the Canary Islands, where the general indirect Canarian tax (IGIC) is applied, which is 6.5% for new-build homes in general and 3.3 % for VPO.
What other taxes must be paid?
VAT is the most important tax that must be assumed when purchasing a new-build home, but you also have to face the AJD. This tax corresponds to notarial, commercial and administrative documents associated with the sale of a property of this type. Thus, it applies both to the deeds and to the formalization of the mortgage.
The AJD depends on the autonomous community in which the mortgage loan is formalized and the value or amount of the mortgage. The percentage to be paid is between 0.5% and 1.5% of the mortgage liability.
What are the taxes when buying a second-hand home?
In the case of buying a second-hand home, VAT is not paid, but the ITP must be paid, whose management is assigned to the autonomous communities. Each region therefore applies its own tax rate and its own tax credits according to the personal circumstances of the buyer, although it is usually between 6% and 10% of the property price.
Other expenses associated with the purchase of a home
In addition to taxes, the purchase of a home has other expenses:
- Notary. The notary has fixed fees established by law and that vary according to the price of the property and the deed. They usually range between 600 and 900 euros.
- Property registration. Registering the home in the Property Registry has a cost that ranges between 600 and 1,000 euros, but it will never be less than 24.04 euros or more than 2,181.57 euros.
- Agency. This is an additional service that can be contracted to carry out some administrative procedures such as registration in the Land Registry, change in ownership of the property tax (IBI) and supplies. The price is between 300 and 500 euros.
Likewise, there are some expenses for contracting the mortgage:
- Appraisal. To apply for the mortgage, you must present the appraisal report of the home to verify its value. The cost is usually between 200 and 600 euros.
- Commissions. For contracting the mortgage, the bank can charge an opening commission. However, entities such as Banco Sabadell do not currently apply it to their mortgage loans.
The bank is responsible for paying the rest of the expenses of the mortgage loan, which are the agency, the notary, the Registry and the AJD of the mortgage.
Banks finance, at most, 70% of the purchase or appraisal value of a property to foreigners.
In any case, when analyzing the expenses involved in buying a home, it is advisable to have the professional advice of an expert who will help the future owner and resolve any doubts that may arise.
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