Spanish property taxes and fees Teseo Estates
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 bringing the total to between 10% and 15% extra. Don’t forget to factor this figure into your budget for the purchase. In this article, we list all the costs involved in buying a property in Spain and how much you can expect to pay for each one. We will 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.
Property purchase in Spain comes with a fiscal obligation – between 8% and 11.5%. Which taxes and how much you pay depend on whether you’re buying a new or resale property.
The purchase of a new build (a property being sold for the first time) involves the payment of VAT (IVA in Spanish) which is 10% of the price, plus 1.5% of Legal Documentation Tax (AJD in Spanish). This brings your total tax bill to 11.5% if you’re BUYING A NEW PROPERTY in Spain.
If you’re buying A RESALE PROPERTY (one that has already changed hands at least once), you’re liable for transfer tax (ITP in Spanish) that is levied on a sliding scale depending on the purchase price. On the Costa del Sol and the rest of Andalucia, this is a progressive TAX where you pay between 8% (on properties priced below €400,000), 9% between €400.000 and €700.000 and 10% from €700,000 onwards.
As an example, in a property priced at 1 Mill € the ITP paid would be:
8%* 400.000 € +9% 300.000 € + 10% 300.000 €: €89.000
In addition to taxes, you’ll also have to pay certain fees when you buy in Spain. They include:
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. Factor in between 0.5% and 1% of the price.
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.
Using the service of a lawyer during the purchase process is highly recommended. Do this before you pay a deposit or sign any legally binding paperwork on the property. He will carry out a Due Dilligence on the property, arrange your NIE (national identification number), represent you in front of the notary and in public identities. Expect to pay around 1% of the price for legal services.
Estate agent fees
Real estate agency fees are paid ALWAYS by the seller so you don’t need to budget separately for them in your calculations. It is strongly recommended that you get advice through a good local agent as it is one of the most important decisions you will make in your life. The Estate Agent can get you the property you are looking for at the best price following logical market criteria. Secure your Investment.
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.
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. Check with your lawyer and 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-€800. The bank may charge an administration fee depending on the type of mortgage and the amounts loaned, but as a general rule, expect a fee of approximately 1% of the mortgage value. All other costs corresponding to the mortgage such as Land registry and notary for the mortgage deeds are covered by the bank.
To find out more about the process of buying a property in Spain please consult our lawyer and tax consultant without compromise and at no charge.