Rent to buy in Spain: What expenses and taxes can you expect?

This alternative way to purchase a home is becoming increasingly popular in Spain

Initial expenses

• A deposit, typically ranging from 5% to 10% of the sale price, which is deducted from the final purchase price
• A rental deposit, which is returned at the end of the rental period provided the property is in good condition
• Additional guarantees, such as a bank guarantee or extra deposits, which may be required by the landlord to secure rent payments.

Ongoing expenses

• Monthly rent payments, as stipulated in the contract
• Maintenance and repair costs, which may be your responsibility depending on the contract
• Utilities, such as electricity, water, gas and internet
• Taxes, including the Property Transfer Tax (ITP) and VAT, which may apply depending on the landlord's status and the autonomous community you live in

Exercising the purchase option

• The agreed-upon housing price, minus any rent payments that have been deducted
• Notary fees, which typically range from 0.2% to 0.5% of the property price
• Registration fees, which vary depending on the property price and can range from 0.1% to 0.25%
• Agency fees, if you hire an agent to handle the purchase process, which can be around 300 euros

Taxes

• During the rental period, the landlord will need to declare rental income on their tax return
• When exercising the purchase option, you'll need to pay the Property Transfer Tax (ITP) or VAT, which can range from 6% to 10% depending on the autonomous community and the type of property
• The seller will also need to pay municipal capital gains tax and may be liable for personal income tax on the capital gain.

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