Plusvalía
Plusvalia is the local municipal tax. It is based on an officially assessed increase in value of the land since the last time the property was sold. This can be quite small if purchasing an apartment, but expensive on a villa with a large plot, which has not changed hands for years. Find out the exact amount from the town hall. Do not confuse this tax with the seller`s capital gains tax on his profit on the sale.

Property Transfer Tax
Which of these two taxes is levied will depend on the type of property you are purchasing; the property transfer tax is levied on resale properties and is charged at 6 % of the new escritura value (purchase price). But if you purchase a newly built property from developer you will pay a different tax called IVA (VAT) is charged at 7 % of the selling price -plus 0.5 % stamp duty.

Who Pays What?
The buyer is responsible for:
- Transfer Tax (or IVA plus stamp duty when buying from a developer)
- Property Registration Fees
- Notary Charges
- His Lawyer's Fees

The developer is responsible for:
- His own Capital Gains Tax on any increase in escritura value
- Plusvalia Tax
- Selling Agent Fees
(The normal custom is for the developer to pay the Plusvalia, if however the buyer agrees to pay this tax, please remember that it is registered against the land and you will have to pay if the vendor fails to do so. This tax is often not demanded until some time after completion).

New Properties
In the case of a new property, ask the developer to show you the Declaration of new construction (Declaración de Obra Nueva) together with a copy of this amount the Declaration of alteration of property of an urban nature (Declaración de Alteración de Bienes de Naturaleza Urbana), which both demonstrate that the property has been registered for eventual payment of I.B.I.

Withholding Tax
If you buy a property from a non-resident person or a company, you must withhold 5% of the purchase price. The tax office (hacienda) make it the buyer`s responsibility that this amount is paid to the tax authority on account of any liability by the vendor to Capital Gains Tax.

Also remember that if there are any debts, outstanding mortgages, unpaid Community fees, etc., then you should make sure that these are paid. If you purchase an apartment in a block or townhouse in a urbanization, ask for a certificate from the association checking that the latest receipt for the community charges (“gastos de comunidad”) was paid, and there are no charges outstanding.