When you are buying a home, itis often the case that both buyer and seller do not pay enough attention to the additional costs incurred. In this article, we aim to inform you of the main taxes and expenses that are involved in this type of transaction.

When buying a property in Ibiza, the buyer will have to pay Value Added Tax (IVA) if it is a new build, and Property Transfer Tax (ITP) if it is a second-hand property and the seller is a physical person.

What do you need to bear in mind when declaring a newly built home at the Notary?

Thirty years ago there were very few laws in Spain that regulated the declaration of new-builds, and hardly any requirements for declaring them in the Property Registry. This absence of legislation was probably due to the established practice under the Spanish Civil Code, by which the owner of a piece of land was also deemed to be the owner of the buildings on it.

Many owners in Ibiza bought their property years ago, for a price declared on the deeds that was well below present market prices. As a consequence, the capital gains tax they will have to pay when they sell the property will be quite high. However, anyone who bought their property before 1994 will be able to benefit from a reduction on said tax.