Everything there is to know about the VAT on purchasing a new property

Find out more about VAT when buying a new build property
Before we explain in detail how much VAT you'll pay when you buy a new home, you must first understand what is meant by the term new construction. The first delivery of a property is said to be when the construction or renovation project has ended (as evidenced by the end of works certificate signed by both the architect and the quantity surveyor) and the property is acquired from the developer.
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There is one exception to this rule. If the developer rents a new home for at least two years and then sells it to a third party, the latter will pay Capital Transfer Tax rather than VAT, as the property will be deemed to have been transferred for a second time.

The party that buys a new home must pay the VAT for it. The amount at issue will be paid directly to the seller, who must pass it on to the Tax Authorities.

What is the VAT rate for new homes?

The VAT rate for a new home is 10% of the official price of the property, except for social housing that is state subsidized or subject to a special tax regime, where the rate is 4%. The same rates apply to parking spaces (for a maximum of two units) and other external structures that might be sold (such as storage units). In all other cases (for example, business premises), VAT is charged at a rate of 21%.
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Other costs associated with buying a property

As well as VAT, buying a new home involves other types of costs that must be taken into account.

  • Valuation costs. By law, a property must be valued before a lender can authorize a mortgage. The cost of valuing a property depends on the individual surveyor or company engaged to perform the valuation.
  • Registration costs. This is the cost to enter the sale of a property in the Land Registry. The cost is established by law and depends on how much the property was sold for. It is paid when the property is registered.
  • Notary public costs. The price charged by a notary public to certify the sale of the property. These rates are official and are the same for all notary publics.
  • Agency fees. Although not compulsory, agency fees are very common. Usually, a property adviser will take care of all administrative procedures when you buy or sell a home. These costs are variable and will depend on the agency used.
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