Do you know what are the total costs when buying a property in Spain?
Buying a Spanish property is an exciting and rewarding experience, but it’s important to be aware of the costs and taxes that come with such a purchase. Knowing what you’re signing up for before you commit to a purchase will set you up for success in the long run.
In this blog post, we will explore the different costs and taxes involved when buying a Spanish property. From legal fees to stamp duty, read on to learn more about what you can expect when making such an important investment.
What Are the Taxes and Fees Involved in Buying a Spanish Property?
In Spain there are transaction fees and taxes which must be paid when buying and selling a property in Spain – ITP property Transfer and VAT tax, capital gains tax, notary fees, registration fees at the property register and mortgage fees (if applicable).
LuxuryForSale.Properties, real estate agency in Marbella, explains below the estimation of the costs you need to include in you budget when buying a property in Spain.
When buying a new development the tax (VAT) is 10% based on the purchase price. Then you need to add another 1,5 % of the purchase price for stamp duty and usually 1% more to the lawyer of the purchase price.
Taxes on buying a Spanish property
Spain has a progressive tax system, which means that the more expensive the property, the higher the taxes. The purchase tax is calculated based on the value of the property, and is paid by the buyer.
The Spanish government also imposes a stamp duty on all property transactions. Buying a home in Spain will cost you between 8 and 11.5% in taxes.
In addition to these taxes, buyers are also responsible for paying the agent’s commission (usually 3-6% of the purchase price) and legal fees.
VAT is charged at 10% on all new properties, while stamp duty is a flat rate of 1.5%. Capital gains tax is only payable if you sell the property within 10 years of purchase, and is levied at a rate of 19%. Inheritance tax is only payable if you die within 10 years of purchase, and is levied at a rate of 34%.
Transfer tax is the only tax that applies to the acquisition of a property that has already been sold. The amount owed is calculated using a sliding scale that considers the property’s selling price.
When buying a used property, a resale property the taxes are calculated diffenently. In Andalucia the amount of taxes (ITP) starts from 8% up to € 400,000. Next 300,000 € is subject to 9% and after this it is a blanket charge of 10%. With resales the Notary fees and registration may vary from 0.5% – 1% of the purchase price, so this needs to be added to your budget, plus the lawyer fee of 1%.
To make sure you know exactly how much you can spend. This will help you focus on properties you can buy, which can help you save time and money.
Fees When You Buy A Property in Spain.
– Estate agent fees
The costs of buying a property in Spain are relatively low compared to other countries. However, there are still a few fees and taxes that you need to be aware of.
– Notary and Property Register
Notary fees for buying a Spanish property are set by the government and range from 0.4% to 1.1% of the purchase price, depending on the value of the property. The average notary fee is 0.5% of the purchase price. Between 600e and 800e should be set aside for the Notary’s costs and 500e for Land Registry.
– Sundry costs.
Many small expenses must be borne in mind such as bank charges or commissions for transferring money, Power of Attorney to your lawyer, etc. The amount you should expect to pay is in the region of between 300e and 400e. In addition to the above mentioned, you must allow approximately 10% on top of the property price to cover the conveyancing expenses. Loans and / or mortgages have not been considered.
– Taxes and Expenses on Mortgage.
The purchase of a property in Spain can sometimes involve the setting up of a mortgage. It is important to establish the costs and expenses involved in setting up a mortgage, in order to avoid any possible misunderstandings or difficulties.
– Mortgage Fees.
The fee is calculated depending on the amount of mortgage liability, copies, pages of the original document and the application of the notary fees in force at the time of completion.
There are a few different fees in taking out a mortgage on a Spanish property. The first is the arrangement fee, which is charged by the bank or lender in order to set up the mortgage. This fee is usually a percentage of the total loan amount, and can range from 1-2%.
The second fee is the valuation fee, which is charged by the lender in order to value the property being used as collateral for the mortgage. This fee is typically around €250-€350.
Finally, there are also stamp duty and registration fees which must be paid when registering the mortgage with the Spanish Land Registry. Stamp Duty: 1% of the mortgage liability.
– Land Registry Costs.
The fees for the Land Registry in Spain are split into two parts: the administrative fee and the cadastral fee. The administrative fee is a fixed rate depending on the value of the property, while the cadastral fee is a percentage of the value of the property.
The amount of the registration cost is also calculated on the mortgage liability, copies of the land search note, authorised copies and the application of the notary fees in force at the time of registration.
– Taxes on Holding Property.
Council Tax is currently calculated on a percentage of the rateable value. For example, a 200.000e property with a rateable value of say 100.000e may attract around 450e in tax. Non-residents property Income Tax: The base rate is 2% of the rateable value and the applicable tax is 25%.
Taxes and Expenses SELLING a Property / Legal costs
A percentage of around 1% is to be expected or a fixed rate.
– Capital gains tax. (*for sellers).
This is based on the difference between the purchase and selling price. Purchase price is not only the net property price but also the taxes, fees or any other costs incurred on the purchase. On the selling price any selling costs (commissions, fees, etc) can be added. The difference, once indexed according to inflation rates, is taxed at a flat rate of 18%. If the vendor is a NON RESIDENT, the buyer must withhold 3% of the price to be deposited at the Revenue as part of the final 18% of the Benefit / Plusvalía.
This small Council tax is usually paid by the vendor although it could be agreed that the buyer pays it.
– Banking costs.
There are several costs associated with banking when purchasing a Spanish property. These can include the cost of setting up an account and transferring money, as well as any fees associated with taking out a mortgage.
The cost of setting up a bank account in Spain is typically around €30-€50. You may also be charged a small fee for transferring money into your new account from your home country.
You should also be aware that there may be costs associated with transferring money to Spain from your home country’s bank account, especially if you are converting from a currency other than euros. If you use a currency exchange broker, you may be able to lower the fees associated with foreign exchange transactions. Compare prices before deciding.
When you sign the title deeds at the notary, you will need to pay for the property by obtaining a banker’s draft, and the bank will charge you for issuing the draft. You might expect to pay a hefty fee, but you can haggle over this with the bank. If you want to prevent any surprises, talk to your bank before ordering a banker’s draft.
Interest on a mortgage
Budget in advance for bank fees if you want to use finance to acquire your Spanish real estate. Additional expenses include the mortgage application fee, valuation, and closing charges. Fees are typically 1 percent of the mortgage’s value but may be more or less depending on the lender, loan size, and mortgage type.
– Legal fees.
You’ll also need to hire a lawyer to help with all the legal aspects of the purchase process, including reviewing contracts and ensuring that everything is in order. Their fees will vary depending on their experience and expertise, but you can expect to pay around 1% of the purchase price.
– Gestoría fees.
The fees for a gestoría can vary, but are typically around 1% of the purchase price of the property. This fee is generally paid by the buyer at the time of purchase.
Inheritance Tax in Andalucia.
Andalucia is an attractive place to invest and reside. Not only because of its amazing lifestyle but recent tax laws have made the area an investor-friendly region. In April 2019, Gift and Inheritance Tax in Andalucia was reduced by 99%, leaving a symbolic 1% as a sort of control tax. If the inherited estate, or assets, are below the €1 million-threshold, heirs will be exempt from paying inheritance tax. People inheriting assets worth over a million will only pay 1% tax on the actual value (so-called “Impuesto de Sucesiones y Donaciones”). Inheritance tax must be paid if the heir is resident in Spain and receives an asset from abroad, or if the assets being transferred are in Spanish territory. This means that both residents and non-residents are subject to this tax and they enjoy the same rates and allowances. In fact, inheritance tax applies to all types of properties, shares and bank accounts located in Andalucia. In summary:
– Pre-existing wealth nil-rate band raised to 1,000,000 euro (per inheritor).
– Estates equal to or below 1,000,000 euro will go untaxed (per inheritor).
– Estates over 1,000,000 euro will benefit from a 99% exemption (per inheritor), meaning you only pay 1% over what exceeds the 1 million threshold.
LuxuryForSale.Properties, expert advice.
If you’re thinking of buying a Spanish property, it’s important to be aware of the costs and taxes involved. While the purchase price is the most obvious cost, there are also other expenses to consider, such as stamp duty, legal fees and local taxes.
Finally, don’t forget about local taxes. In Spain, these include IBI (an annual tax on properties), plus rubbish collection and water charges. These are usually paid by direct debit from your bank account.
Would you like to get some help? We also have other “Best Buys” properties that are not listed in this section as per the discretionary wishes of the owners. Consult one of our sales team members for information on additional properties in this category.
Latest Featured Exclusive Property For Sale in Spain.
Our Bargains Properties section carries a selection of properties in Marbella and surrounding areas that have been significantly reduced in price .
Or, if you need any help to find exactly what you are looking for, please Contact Us at our LuxuryForSale.Properties sales office in Marbella, your premier resource for listings and real estate market information for Costa Del Sol.
– Below you can find some international, well known, luxury Real Estate and financial Webs:
Choose a property and any of LuxuryForSale.Properties, real estate agents, will be delighted of calculating the buying costs for you.