What are the costs associated with buying a property in Ibiza? In effect, the costs associated with the purchase of property on this Mediterranean island have special features that set them apart from other cities and autonomous regions in Spain. Below, we will provide you with a detailed explanation.
Legislation regarding the purchase and sale of real estate in Spain has undergone significant changes over the years, especially since 2012. Nowadays, there are various costs associated with the purchase of a property, including taxes, capital gains and processing fees, among others.
Transfer Tax and Stamp Duty
The Transfer Tax (ITP) and Stamp Duty (AJD) are some of the most relevant taxes when purchasing a property in Ibiza. These taxes are applied to the purchase and sale of second-hand properties.
The ITP is a regional tax that is levied on sales between private individuals in the Balearic Islands. This tax is applied to the purchase of second-hand properties and varies between 8% and 13% of the total value of the property, depending on its price.
Stamp Duty
Stamp Duty (AJD). This tax is applied to notarised documents and may include the deed of sale, the mortgage and other documents related to the transaction.
Stamp Duty rates vary in each autonomous region, in the case of the Balearic Islands it has a general tax rate of 1.5.
Tax on the Increase in Value of Urban Land (Capital Gains Tax)
The Tax on the Increase in Value of Urban Land, commonly known as capital gains tax, is another tax to consider when purchasing a property in Ibiza. This tax is based on the increase in the value of the land since the last transfer and is paid to the corresponding town hall.
The amount of the capital gains tax is calculated based on several factors, such as the cadastral value of the land, the time elapsed since the last transfer and the tax rate set by each municipality. It is important to bear in mind that the capital gains tax can vary significantly depending on the location and length of time the property has been owned. It is therefore advisable to carry out a thorough investigation prior to purchase.
Withholdings for non-residents
The Spanish Tax Agency (Hacienda) retains a 3% withholding from sellers who are NOT resident in the country, an amount that the buyer has to pay to the Tax Agency within the following 30 days. This withholding is considered a down payment towards the Wealth Tax arising from the sale of the property.
Are you still unsure about the costs of buying a home? Get in touch with us and we will be happy to provide you with all the information and advice you need.
