What are the costs of buying a house in Ibiza?

In our real estate agency we are often asked this question. The costs of buying a property in Ibiza are somewhat different from those of other cities and autonomous communities. We explain them to you next.

The legislation regarding the purchase and sale of properties in Spain has been changing over the years, especially since 2012. Currently, there are various costs arising from the acquisition of a property: taxes, capital gains, management costs, ...

Let's start with the taxes related to the purchase of a house in Ibiza:

Tax on capital transfers (ITP)

The Transfer Tax (ITP) is a tax of autonomous competence that taxes the sales and purchases between individuals in the Balearic Islands. This tax is applied to the purchase of second-hand properties in the Balearic Islands and varies between 8% and 11% of the total value of the property and depending on the price of the property:

• From €1.000.000: 11% ITP
• From €600.001: 10% ITP
• From €400.001 to €600.000: 9% ITP
• Up to €400.000: 8% ITP
  • This last segment has a novelty in 2019: would go from 8% to 5% in cases where the real value of the property does not exceed 200,000 euros and is the first home of the acquirer.

With this table as a reference, we can calculate that the ITP of a house sold for €500,000 will be €45,000, as it would fall within the 9% range.

Value Added Tax (VAT or IVA)

If the property you are buying is new, Value Added Tax or VAT (IVA) will be applied instead of ITP. In this case there are no tranches as in the ITP, but it is a fixed rate set at 10%.

Therefore, if we were to buy a new home in Ibiza for €600,000, the VAT would amount to a total of €60,000.

Municipal Capital Gains ("Plusvalia"

The town councils have established another tax related to the purchase and sale of houses. This is the municipal capital gain, which records the increase in the value of urban land.

This amount is variable (it depends on several factors, such as the size of the land, the cadastral value, the years of permanence of the good in the hands of the salesman, ...) and, according to the law, it is the seller who has to pay. However, some contracts may stipulate that this tax is passed on to the buyer.

Stamp Duty (IAJD)

This tax also falls on the buyer when buying a newly built home in Ibiza. It is determined by the autonomous community itself and in the case of the Balearic Islands the indicator stands at 1.2%.

Therefore, when we buy a new property we will face a total of 11.2% taxes (10% VAT and 1.2% IAJD).

Now that we know the taxes, let's move on to the management costs that have to be faced when buying a property in Ibiza:

Registration of the property and notary's office

To formalize the purchase of a property in Ibiza, it is imperative to grant a public deed through a notary to the operation and register it later in the Land Registry.

The notarial act and its minutes will depend on the value of the property, the number of pages, documents incorporated...both that act and the Inscription in the Registry of the Property, are paid in function of Tariffs that the administration fixes.

Expenses derived from the purchase with mortgage

The distribution of the costs of formalization that are generated when writing and registering a mortgage loan, after going through a series of legal processes and a regulatory change, has become more or less clear. Let's see what costs the bank has to pay and what others the client has to take care of:

The client has to pay...

• Appraisal
• Your copy of the deed

The bank must pay...

• The agency
• The notary's office
• The registry
• Tax on Documented Legal Acts (IAJD)
• Your copy of the deed

Withholdings for non-residents

The Spanish Tax Agency (Hacienda) withholds 3% from sellers NOT resident in the state, an amount that must be paid within 30 days by the buyer to the Tax Agency. This withholding is considered as payment on account of the Wealth Increment Tax generated by the sale to the seller. The declaration of this capital increase must be made during the 4 months following the sale of the property.

Real Estate Advice in Ibiza

Do you still have doubts about the costs of buying a home? Come to our real estate agency in Ibiza and we will solve them without any kind of commitment.

Ibiza Country Villas can provide you with all the information and real estate advice you need to buy your next property with a close deal and the best conditions.

We look forward to seeing you!