Cost of buying property in Spain.
The fees you have to pay when you buy a property in Spain may include the following:
- Transfer tax (resale properties only)
- Value Added Tax (VAT) (New properties Only)
- Land Tax
- Notary’s fees
- Legal fees
- Deed registration fee
- Utility fees
Most taxes and fees are paid by the buyer, with the exception of land tax called “plus valia”. However, a contract may indicate that the buyer is responsible for all expenses (todos los gastos), including landtax. It is legally provided that the buyer agrees, as the law merely stipulates that the expenses will be broken down when not specified in the contract. Always make sure that you know exactly what the total fees will be before you sign a contract.
When you buy a used property, you must pay a transfer tax (Impuesto de Transmisiones Patrimoniales / ITP) of a certain percentage. The percentage varies depending on the area where the property is located. In our area the tax is between 8-10%.
Value Added Tax in Spain (VAT):
VAT (Impuesto sobre el Valor Añadido / IVA) of approx. 10% is charged on new properties purchased from a builder and sold for the first time.
Land tax (Impuesto Municipal sobre el Incremento del Valor de los Terrenos), commonly called “plus valía”, is a municipal tax on the increase in the value of land (excluding buildings) since the last change of ownership. Traditionally, it is paid by the seller as he is the one who has achieved the profit, although in some areas it is common practice for the buyer to pay it.
The fees for the notary (notario) arising from a sale are set by law and are based on a sliding scale depending on the selling price. Fees are usually from 320 € to 700 €. If you buy, land for building a house, you will pay fees for two deeds; one to the ground and another to the building.
Legal fees associated with a sale are usually about 1 to 1.5 percent of the purchase price for an average property. The actual fee may depend on the work involved, although there is usually a minimum fee.
Registration of the deed:
This usually costs between 180 € and 500 €.
Fees to utilities:
If you buy a new property, you usually pay for electricity, gas and water connections and installation of meters. You should ask the developer or broker to give you the cost of this in writing. If you buy a used property, you are likely to pay for the cost of name changes.
In addition to the fees associated with buying a property, you must also take operating costs into account.
These include local property taxes, annual wealth tax, income tax assessed on rental income, possibly an accountant or tax adviser, rubbish tax, community fees, garden and swimming pool maintenance, insurance, running bills for utilities (electricity, gas, telephone, water); and possibly a caretaker or a property manager.