What are the costs and taxes involved in buying a Spanish property?
Buying a property in Spain entails certain costs in addition to the purchase price. As well as taxes, you’ll need to pay fees for professional services. As a result, the total can add up to between 10% and 15% on top of the purchase price. Don’t forget to factor this figure into your budget for the purchase.
In this article, we list all the taxes and costs involved in buying a property in Spain and how much you can expect to pay for each one. We’ll assume you’re buying a home to live in and not a commercial property, as this makes a difference to the taxes to be paid. Note that some taxes on buying a Spanish property vary from region to region – those in this article refer to the Costa del Sol in Andalucia.
Taxes on buying a Spanish property
Spanish property taxes vary depending on whether you are buying a new home or a resale property. New refers to a property that has never changed hands before – in this case; it is usually sold directly by the developer. Resale refers to homes that have been sold at least once before. This includes new properties that were bought by banks or taken on by them in case of default on mortgage payments, for example.
Expect to pay between 8% and 11.5% in taxes on a property purchase in Spain.
You are liable for two taxes when you buy a new-build property in Spain:
- VAT (IVA in Spanish) levied at 10% of the purchase price. For example, if you’re buying a new-build villa in Marbella that costs €950,000, you are liable for the payment of €95,000 for VAT.
- Stamp duty (legal documentation tax/ AJD in Spanish) at 1.5% of the purchase price. In the above villa example, you would have to pay €9,500 in AJD.
Between them, VAT and AJD add 11.5% to the cost of buying a property in Andalusia.
There is only one tax levied on resale property purchase, and that is transfer tax (Impuesto de Transmisiones Patrimoniales/ITP in Spanish). The amount due depends on the price of the property and on a sliding scale.
On the Costa del Sol in 2020, transfer tax was levied at the following rates:
- 8 per cent on properties up to €400,000
- 9 per cent on properties priced between €400,000 and €700,000
- 10 per cent on properties priced over €700,000
Transfer tax is also levied on other property types such as a garage space in a car park. In this case, it’s also applied as a sliding scale as follows:
- 8 per cent on garage spaces up to €30,000
- 9 per cent on garage spaces priced between €30,000 and €50,000
- 10 per cent on garage spaces priced over €50,000.
ITP adds between 8% and 10% to the cost of buying a property on the Costa del Sol.
Costs of buying a property in Spain
As well as paying taxes, you have to pay fees for services when you buy a home. They include the following:
The notary charges for preparing the title deeds for the sale and witnessing the signature of the deeds by both parties. Fees are calculated depending on the purchase price and the complexity of the title deeds – for example, purchases with a mortgage attract higher notary fees. Factor in 1% of the price, although you will probably pay around 0.5%.
Land Registry fees
The Land Registry (Registro de la Propiedad) officially records the ownership of the property in your name once the purchase has been completed. For this, fees of between 0.5% and 1% are charged, depending on the purchase price and whether a mortgage is involved.
Using the service of a lawyer during the purchase process is highly recommended. Expect to pay around 1% of the price for legal services, more if the purchase involves complex negotiations or legalities.
Estate agent fees
Real estate agency fees are usually paid by the seller. Fees range from 2% to as high as 10% (or more) depending on the type of property and whether the agent has an exclusive contract to sell the property. However, since real estate agency fees are usually included in the purchase price, you don’t need to budget separately for them in your calculations.
Buying a property in Spain involves some paperwork, and it is usual practice to use a gestoría (paperwork and administrative services). The gestoría is responsible for a number of tasks including:
- Ensuring taxes are paid on your behalf.
- Collecting the deeds from the Notary and taking them to the Land Registry for registration in your name.
- Registering you for local council taxes and community charges. Link to community charges https://www.realista.com/resources/buy/your-guide-to-community-fees-in-spain/
- Transferring utility supplies to your name and setting up a direct debit for their payment.
A gestoría generally charges a set fee for their services, and it starts at around €100.
If you’re transferring money to Spain from your bank account in your home country, you may incur fees on the transaction, particularly if you’re transferring from a different currency to euros. Using the services of a specialist currency exchange broker can reduce bank charges – shop around for quotes.
Banks also charge for issuing the banker’s draft used to make the payment for the property when you sign the title deeds at the Notary. Charges for this can be high (don’t be surprised if you’re charged 0.5% of the cheque’s value) but are negotiable. Check with your bank before you order a banker’s draft to avoid unpleasant surprises.
If you’re using financing to buy your property in Spain, you’ll need to include bank charges in your budget. You’ll have to pay for a valuation – this usually costs around €500 – plus the mortgage costs themselves. These depend on the type of mortgage and the amount loaned, but as a general rule, expect a fee of 1% of the mortgage value.
Get expert advice
Understanding which taxes and costs are involved in a property purchase on the Costa del Sol is just part of the buying process. At Realista, we offer comprehensive advice and information throughout the entire process. Get in touch to find out how we can help you buy your dream home on the Costa del Sol.
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