Buying a home in Spain has a cost outside the property’s purchase value. The total taxes, fees and charges for the buyer can vary from 8% to 15% of the purchase price of the property. Do not forget that Spain is a country and it has 17 different tax regimes, each autonomous community managing its property taxes.
Discover the real price of real estate in Spain for buyers and sellers
Whether you are a buyer or seller of real estate in Spain, you will always have expenses, taxes and duties to pay on the transaction. For the purchase, these additional costs on the price of real estate in Spain vary depending on the nature of the property, old housing or new housing, and the area where you buy it. This article is the more comprehensive update as of April 2019. It includes the mortgage fees and does not take into account the IAJD, the responsibility of banks since November 2018. Do not hesitate to contact us if you have any questions, send us an email to firstname.lastname@example.org
THE REAL ESTATE PRICE IN SPAIN FOR THE PURCHASER OF AN OLD PROPERTY
ITP, Transfer of Assets tax is the tax on the transfer of ownership (“Impuesto de Transmisiones Patrimoniales”). In the cost of real estate, it is by far the largest expense of the purchase. The management of the ITP is granted to Spanish regions. The common rate varies, depending on autonomy, from 4 to 11% on the value of the purchase. In Madrid, the common rate is 6%, but in Barcelona and in Valencia, it is 10%. In Andalusia, it is 8 to 10%, the Balearic Islands 8 to 11%, and the Basque Country 4%.
If the buyer is self-employed, the ITP rate will decrease depending on the purchase value, the age or the income of the buyer. For example :
In Catalonia, young people under 33 years of age with less than €30,000 of annual income or low-income and a large family pay only 5% of ITP.
In Andalusia, the ITP is variable according to the purchase value, 8% for the first €400,000, 9% for the part between €400,000 and€700,000 and 10% for the part beyond €700,000. In any case, consult the legislation of your community regarding ITP (Transfer of Assets Tax)
Notary fees on the deed of sale.
As we have explained in several articles, the notary does not have the same role in Spain as in other countries. It is a simple registration facilitator: they are satisfied to write the deed of sale and the mortgage act (“escrituras de compraventa y del préstamo hipotecario”), to read the main passages of the contracts, to ensure the identity of the buyer and seller and to certify the signatures of both. Notarial fees range from €300 (for a purchase of €50,000) to €800 for a purchase of € 1 million. Calculate an average 0.25% of the purchase value of the property.
The Register of the Property and the deed of sale (“registration in the Registro de la Propiedad”).
Their cost varies from €200 (for a purchase of €50,000) to €400 (for a purchase of € 1 million). Count on average 0.15% of the purchase value of the property.
The costs of managing the deed of sale (“gastos de Gestoría”):
These are the costs resulting from the administrative management of the file, in particular the liquidation of the taxes and the registration in the register of the property of the deed of sale for a public sale. Count on average 0.10% of the purchase value of the property.
The fees of the real estate agency.
The standard is that agencies do not take commissions on buyers, this is the case for the vast majority of agencies in Catalonia, the Madrid region or Andalusia. Nevertheless, there are communities where the practice is to spread the commission fees between the seller and the buyer. This is particularly the case of Valencia / Alicante where commissions range from 3 to 5% (+ VAT) are divided equally between sellers and buyers.
The fees of the Real Estate Advisor or the lawyer specializing in real estate law.
For a non Spanish-speaking buyer, consulting fees must be included in the real estate budget in Spain. The real estate advisor and / or lawyer check the real condition of the property and check the various documents related to the sale.
If the buyer chooses the lawyer option, his accompaniment will cost the buyer about 1% (+ VAT) of the purchase value of the property. His work is limited to control and legal support.
As a point of reference, VAT or Value Added Tax, is added to almost all transactions related to real estate.
The real estate advisor goes beyond the mission of the lawyer: he helps the buyer in the search for the financing of the property, he works with the buyer to determine the property characteristics, he does the research and submits a list of properties to visit that he pre-screened. If the buyer chooses the real estate advisor option: the real estate advisor knows the market perfectly and he negotiates more easily with the seller the price of the property down to the estimated value or less as the market will bear, (up to 10% off is some cases).
The Real Estate Advisor will work tirelessly for the buyer, from the search and selection of the property, to visits, inspections, document review, all the way to the signature at the notary. With the lawyer’s fees included, the cost of the service of a real estate adviser is around 2 to 3% (+ VAT) of the buying price. With an advisor, the cost of real estate in Spain will always be lower than if the buyer alone goes through all the steps. Not to mention the time saved and the pitfalls avoided! See the links below on Pitfalls to Avoid.
The buyer of the property uses a bank to pay all or part of its acquisition. In addition to the interest rate (ask for a fixed rate loan if you use a Spanish bank), you will have to pay mortgage fees and other fees that will be imposed by the bank. Some of those fees:
- Notary fees, acquisition
- registration in the property register, 0.10%
- management of the mortgage deed. 0.05%
As of the June 16, 2019 implementation of the new mortgage law all these expenses go to the banks.
The fees of the bank. Normally it takes 1% of the value of the loan, but be careful some banks take up to 2%.
Property evaluation fees (“gastos de tasación inmobiliario”).
The appraisal is requested by the bank and (normally) the loan amount is based on the smaller value between the appraisal and the purchase value. Performed by a certified architectural firm, the cost of the appraisal is €250 to €600. It varies according to the area, location and society of appraisers. These costs are entirely the responsibility of the buyer, or entirely the responsibility of the lending bank, or evenly divided between the buyer and the bank. (Is this negotiable?)
- The fees imposed for home insurance (from 200 to 1000 € per year)
- Bank account and credit card management fees will be less than €100 a year.
- life insurance, the cost of which varies greatly depending on the age and state of health of the buyer or buyers (from € 200 to € 2000 per year per person)
THE REAL ESTATE PRICE IN SPAIN FOR THE BUYER OF A NEW PROPERTY
These are the same fees as for the buyer of an old property but the VAT on the purchase value (“IVA”) replaces the ITP. The VAT rate on the purchase of a new property is 10% throughout Spain, except in the Canaries where it is 7%.
If the new housing is owned by a bank that acquired it from a developer, the property is not subject to VAT but to the ITP (Transfer of Assets Tax) as in the case of an old property.
If the housing has more than two garage spaces, the VAT to apply on the purchase of garages is no longer 10% but 21%!
THE PRICE OF REAL ESTATE IN SPAIN FOR THE SELLER OF AN OLD PROPERTY
The commission of the real estate agency is 3% to 5% (+ VAT) of the price of the sale, with very often a fixed rate for the property of lower values (for example a fixed agency fee of €3500 for a property lower than €50.000). The seller can deduct commission costs from the real estate tax base. If he gives his property exclusively to an agency, the seller can negotiate this commission down. In Valencia, the burden of this commission is divided between seller and buyer.
The national tax on capital gains (“plusvalía de Hacienda”).
For more details and in particular the calculation of the surplus value, see our article “Tax on the real estate gain”.
If the seller is a resident of Spain, he is subject to the IRPF, the tax on the income of natural persons (“Impuesto sobre Renta de las Personas Físicas”): for the first €6000 of surplus-value, it is taxed at 19%, from the €6000 to €50000 range, the rate is 21% and beyond €50,000 is 23%.
If the seller is not a resident of Spain, it is subject to the IRNR, the non-resident income tax (“Impuesto sobre la Renta de no Residentes”) and the rate is 19% on the highest-value achieved.
(1) if the unit sold was the seller’s principal residence and they reinvest all or part of the sale in the purchase of another home in a European Union country within 2 years of the sale of the first he benefits from a tax rebate;
(2) if the unit being sold was the seller’s principal residence and has (or is) over 65, there is no tax payable;
(3) If the seller is not a resident in Spain, the buyer must retain 3% of the sale price and return it to the tax authorities, in this way the administration ensures that the seller will pay the corresponding IRNR to the capital gain on the sale (once the calculation of this tax has been made, the tax authorities will reimburse the seller the difference in case of overpayment or will require the seller a supplementary payment if the tax due is higher).
The municipal tax on the surplus value (“municipal plusvalía” or “Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana”). It is a tax that depends on the location of the dwelling, the length of ownership of the dwelling and the cadastral value of the land on which the housing is built. The cost: from a few hundred euros to several thousand euros.
The certificate of energy efficiency (“certificación de eficiencia energética”). It is mandatory when signing at the notary, its cost varies from €100 to €500.
The mortgage cancellation fee, or prepayment penalty. This is a sellers fee. This fee only exists in the case where the seller’s mortgage is still in effect (also add the notary fees and management fees related to this cancellation). It takes an additional 0.5 to 1% of the balance of the mortgage to pay off the balance. Some banks may only require you to have the mortgage in place for a minimum of five years to avoid the prepayment penalty.
Here are some other articles related to buying a home in Spain. Enjoy:
IBI (property tax in Spain) in proportion to the duration of occupation since January 1 of the year of sale until the date of sale. If the seller has already paid for it, he then recovers the part due from the buyer (from the date of sale to December 31st of the year of sale).
As you start the process of buying a home in Spain, you should always have a Real Estate Advisor, who will have your best interest in mind. Here is an article that will spell out how we can help you search for your home in Spain.
With more than 20 years of experience in real estate acquisition procedures in Spain, we are at your disposal to assist you with all the necessary steps from the search for a property to services offered after the acquisition. When you are buying a home in Spain we help with organizing the visits of properties, the legal verification of the properties, the obtaining of a mortgage, the administrative procedures and the signature of the different notarized documents.
Do not hesitate to contact us!
Send an email to email@example.com.