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Mortgages
What is mortgage tax?
There are certain taxes you have to pay when you buy a home, whether new or second hand, and take out a mortgage. Here are the details:
Taxes for the purchase of a new-build home
When you buy a new-build home, you are liable for VAT. The rate in 2020 is 10%. However, if you a buy a new-build home in the Canary Islands, you will pay IGIC (General Indirect Canary Islands Tax) instead of VAT at a rate of 6.5%.
In the case of the public housing stock (i.e. properties owned by a government authority), VAT is likely to be charged at 4%, but this may vary because it depends on the region of Spain and the type of social housing.
For commercial premises you will pay 21% VAT, and if you buy a garage or storage unit the rate will be 10%.
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Taxes for the purchase of a second-hand home
The main tax you will pay if you buy a second-hand home is the property conveyance tax (ITP). The amount depends on the percentage that is applied to the value at which the property is notarised and the region of Spain in which it is located, but you can expect to pay between 6% and 10%.
ITP
Andalusia
8,0%
Aragon
8,0%
Asturias
8,0%
Balearic Islands
8,0%
Canary Islands
6,5%
Cantabria
10,0%
Castile-La Mancha
9,0%
Castile and Leon
8,0%
Catalonia
10,0%
Ceuta
6,0%
Valencia
10,0%
Extremadura
8,0%
Galicia
10,0%
Madrid
6,0%
Melilla
6,0%
Múrcia
8,0%
Navarre
6,0%
Basque Country
4,0%
La Rioja
7,0%
Large families (classed as three or more children), the disabled and young people buying their first home are usually eligible for certain discounts.