What Are the Costs of Buying a House in Spain?
In general, the cost of purchasing a property is between 11 – 14% of the purchase value. There are two main reasons for this variance. First is the status of the property if it is new or second hand. The other is the different tax policies applied by different autonomous regions of Spain.
Tax is the biggest cost after the property price. In the whole of Spain (except Canaria Island) VAT is 10% while purchasing a new house for residence. New house means buying the house directly from the construction company. The VAT on land and commercial purchases is 21%. If the parking lot has a separate title deed, the VAT for that will be 21% as considered commercial.
Property Transfer Tax (ITP):
If the purchased house is second hand, then transfer tax (ITP) is applied and usually, it is between 8-10%. This rate can be different from one autonomous region to another or depending on the value of the purchased property.
Stamp Duty or Legal Documentation Tax (AJD):
Stamp Duty (known as AJD - Actos Juridicos Documentados) is on all notarization of documents and the rate is around 1-1,5% in general. This can be different from one autonomous region to another. It is applicable to land and new property sales.
Attorney in Law:
Getting legal assistance in a property purchase is not a legal obligation. Even so, we definitely recommend you to have it. Your lawyer can explain to you all the necessary steps and assist you in the preparation of documents. We also recommend you to give a Power of Attorney to your lawyer for him to act on your behalf so that you would not have to stay in the country all along the purchase process. In this way, your lawyer can coordinate the things to be done on your name.
Legal fees may vary depending on the amount of work to be carried out and the complexity. Generally, lawyers set the fee as 1% of purchase value.
In order to be able to process a purchase contract to Land Registry, primarily the contract has to be done obligatorily before the Notary. Notary fees may vary according to the purchase value and complexity of work but usually, it is around € 1.000.
Land Registry cost is around € 750 in general but depends on the purchase value of the property.
In case of using a Mortgage:
Along with all the above-mentioned costs, there would be some additional ones in case of using a house loan. Also, using a mortgage would increase the notary costs. For mortgage, the below-mentioned costs will occur:
Valuation: Bank always orders the valuation of the property for the mortgage. The appraisal report is a legal obligation and has to be done by a registered valuation company. The report is used for determining the real value of the property and the amount of the loan is a certain percentage of this value. The cost depends on the valuation company and the purchase value but it usually is around € 250-450.
Disbursement Fee: May vary from bank to bank. All the commission rates should be well researched. Rates can be from 0% to 2%.
The rates here are only for giving an idea about the costs. The costs may vary according to the type of property, region, purchase value, payment terms, etc. We recommend you to work with a trustable real estate agency to proceed properly in this process.