Costs when buying a house in Spain
What are the costs and taxes involved in buying a property in Spain? For residential properties, the amount of tax payable will vary depending on whether you are buying a resale property or a new-build property. Apart from taxes, there are also various fees that you will need to consider. Below you will find an overview of the costs involved in buying a property in Spain.
Taxes
In case of acquiring a resale property, the buyer must pay property transfer tax, which is currently 7% of the purchase price specified in the title deed. To calculate the base amount of this tax, you take the purchase price and determine the portion that relates to the share each person is purchasing. This amount must be settled and submitted to the corresponding tax office within 60 days of the purchase of the property.
If the seller is a real estate developer and the property represents a first-time transfer, then in lieu of the transfer tax, the buyer must pay VAT at 10% of the price specified in the title deed. The VAT is paid directly to the vendor, and an additional stamp duty of 1.2% must be paid by the buyer to the provincial tax authorities within 60 days of the completion of the purchase.
In case of buying a plot, the applicable tax depends on the legal status of the seller. If the seller is a natural person, the buyer must pay 7% transfer tax. If the seller is a legal entity, the buyer must pay 21% VAT and 1.2% stamp duty. In this scenario as well, the applicable transfer tax or stamp duty must be paid within 60 days of completion of the purchase.
Fees
In addition to the taxes, there are the following fees:
Notary fees for the preparation of the purchase/sale deed: They can range from 700 to 2,500 euros, depending on the purchase price.
Land registry for updating the title: This fee also depends on the purchase price. It is generally less than half of what the notary charges.
Legal fees: If you opt to contract a solicitor, they generally charge 1% of the purchase price plus VAT.
Administrative fees: If you don’t use a solicitor or if you take out a mortgage on the property you are purchasing, then you have to pay an administrative fee to the company that collects the deeds, pays the taxes and handles the registration. The administrative fees vary depending on the price of the property.
If you apply for a mortgage in Spain, you should know that from 2018-2019 the expenses of the notary, land registry, stamp duty, and the administration fees must be assumed by the entity that grants the loan. The buyer will only be responsible for the cost of the initial valuation of the property and any other costs incurred, such as the use of a broker or legal advice.
It is important to note that real estate agency fees in Spain are usually paid by the seller, not the buyer. In general, fees range from 2% to 10%, depending on the region of Spain, the type of property and whether the agent has an exclusive contract to sell the property. As agency fees are typically included in the sale price of a property, buyers don’t need to budget for them separately. If, however, you hire an agency to actively search for a property on your behalf, a separate “Property Finder” fee will apply, as this service is not included in the purchase price.
At Cumbre Villas, we can provide you with a simulation of the exact costs depending on the price of the property you are interested in and the amount of money you plan on borrowing.