When you buy a property in Spain you must pay one of the following two indirect taxes:

• Value added tax (VAT) plus Stamp Duty, in case of newly built houses
• Transfer Tax in case of second hand or used houses

In case the transaction is subject to VAT, the taxable base is the price paid for the property and the tax rate is currently 8 %. Stamp Duty varies from one region to another, but the most commonly rate is 1 %.
When Transfer Tax applies, the tax rate is normally 7 %, although it may vary depending on the Region where the property is located.
The main problem with transfer tax is the taxable base, which is the fair market value of the property when the transaction took place.
Note that this concept may be different from the price paid. So it happens quite often that you declare as taxable base the price paid to see that a few months later you receive a tax assessment from  the regional tax office increasing the taxable base on the grounds that the fair market value is supposed to be  higher than the price paid. Then you have to pay 8- 10 % on that difference. Of course you can object and start a legal procedure to defend the value declared. As a barrister, I love this happening, but to be completely honest in most cases it is not worth doing so. At the end of the day you end up paying in professional fees (real estate experts, lawyers…) any hypothetical saving you may get from the legal procedure.
I have always thought that in sales between non related parties there is not such thing as a market value different from the selling price. Precisely the price represents the consensus between an informed buyer and an informed seller on the value of a property at any given time. Therefore, in my view, it is an absolutely a non sense the possibility of a market value different from the selling price, at least, in transactions between unrelated parties.
To overcome this legal uncertainty many regions follow in practice safe harbor rules. Thus, if the taxable base declared is higher than a certain value, your tax return is deemed to be correct. Basically the method is to multiply the cadastral value by a number which varies depending on the location of the property. Usually, the multipliers range from 1,5 to 3,5. Some regions, for example Valencia, provide an on line tool to help tax payers find the appropriate value for the property.
You can find the cadastral value of the property in the Property Tax notice (“Impuesto sobre bienes inmuebles”) or in the web site of the catastro.
One final word. Hiring a Spanish real estate solicitor may be expensive, but be sure that failing to do so can be the fastest way to ruin. Avoid hiring foreing practitioners, accountants, real estate brokers etc. They may be very skilled proffesionals but they are not legal experts. Spanish real estate legislation is very complex and probably beyond the knowledge of most proffesionals without a legal background.