Spanish Mortgage Tax To Be Paid By The Lender Instead Of The Buyer, Supreme Court Rules
It’s no secret that the additional purchase costs of buying in Spain, Portugal & many other European countries can be quite prohibitive. These additional costs consist of VAT or transfer tax, plus conveyancing costs, stamp duty and land registry fees that the buyer should budget to total circa 12% of the purchase price.
If the buyer takes out a Spanish loan then (AJD) Actos Juridicos Documentados tax is also required to be payed at the time of completion. This tax alone, although it can vary depending on region, usually makes up for around 2% of the mortgage amount.
Fortunately for new buyers, the AJD tax will now be paid by the financial sector after the Spanish Supreme Court ruled that lenders take on this payment, instead of the borrower.
As a result of this new ruling, buyers will no longer need to commit quite so much ‘cash’ when purchasing a Spanish property and will find themselves spending up to 2% less on the total cost of the transaction.
Spanish property purchasers will experience the benefit immediately as the ruling is already being applied to all new mortgages. With this taxation change now in place, the demand for Spanish property is expected to increase significantly.