Taxes to pay

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There are some taxes to have in consideration when buying a new house in Spain.

1. Impuesto sobre Bienes Patrimoniales- ITP (Estate Tax):
   It supposes 7% of the price declared in the deed, that it does not have to coincide with the price of the property. This tax is incompatible with the IVA (VAT).
2. Impuesto sobre el Valor Añadido - IVA (VAT):
   Value Added Tax. It is applied to the house of new construction, and supposes 7% of the price declared in the deed. This tax is incompatible with the ITP.
3. Impuesto sobre bienes inmuebles (IBI):
   As popularly known contribución urbana (urban contribution). It is paid annually, generally during the last trimester of the year. Its tax type is fixed to a percentage of the house´s cadastral value.
4. Plusvalía (Land Value Tax):
   It burdens the increase that experiences the value of lands between the moment of its acquisition and its sale. The owner is the one who has to pay it, unless both parts stipulates the opposite in the transaction contract.
5. IRPF (Income Tax)
   For the purchase of a house as the main one, the buyer can reduce the tax on a percentage of the paid amounts so much for price as of other expenses originated by the transaction, although with a maximum limit on its tax basis.

Also the buyer will be able to deduce as expenses the interests of the mortgage. On the other hand, and from the deed of transaction, the buyer will have to include like entry in the income tax return, the value that turns out to apply a certain percentage on the cadastral value of the house or on its price in deed if this last one were superior.