The purchase price is not the only cost which you need to take into consideration.

Are you thinking about buying a property in Spain to live in, use as a holiday house or strictly for investment purposes?

There are several other expenses involved in buying real-estate in Spain. These include taxes, associated buying costs, commissions and legal fees.

In this article we set out all of the upfront costs involved in purchasing a property in Spain, particularly the Valencian region.

A Quick Note

Before getting into the taxes payable. It is important to distinguish between buying new builds and resale properties, as different taxes apply to each.
New builds are residential properties being sold for the first time (never previously occupied).
Resale properties are those that have been sold before. Generally speaking, that means when buying a home from a private individual.

 Transfer Tax (ITP)

This tax is payable when buying resale properties in Spain.
Transfer tax in Spain ranges between 6 – 11% and can differ depending on which region you are looking to buy in.
However, in the autonomous region of Valencia, it is 10% across the board.

VAT & Stamp Duty

This is known as IVA and AJD – These taxes apply for residential properties being sold for the first time, for commercial properties and plots of land.
VAT is 10% for residential properties and 21% for commercial properties and plots of land.
Stamp duties in Valencia is 1.5% of the purchase price.

However, in this category of properties you do not pay transfer tax.

Registry, Notary and Gestor Costs

On the day of transfer the Notary makes sure that all the paperwork is in order and that the sale may proceed. This includes things like making sure there are no debts on the property(mortgages or court judgements) and that the seller is up to date with payment of community fees and taxes.

The property registry ensures that the property is transferred into your name correctly after the purchase.

The Gestor ensures that all of the papers from the Notary’s office get to the right places in the time period allowed and the above taxes get paid correctly.

All of these costs are made in one payment at the Notary’s office .The Notary makes sure that all payments are made correctly from that single amount and that the tax is paid within the 30 day time period allowed.

This usually costs just under 1% of the purchase price.

Estate agents commission

This is usually between 2-6% and is normally split 50/50 between the buyer and the seller. Typically you can work on the buyer and the seller each paying 3%.

Beware, if the agent tells you that there is no commission. It has probably been built into the purchase price already. Nothing is ever free! This also means that because they are getting paid by the seller, they are most certainly not working for you. They will be doing everything that they can to achieve the highest price for the seller.

Conveyancing fees

It is not uncommon to get an independent lawyer to work for you. They will assist you with submitting, collecting and signing documents relating to the sale on your behalf.
They will also look into things like; the seller having the legal right to sell, that no debt is attached to the property and that the seller is up to date with all community fees and taxes.
Although this is also done by the Notary on the day of transfer, your lawyers job would be to do this before any deposits are paid.
This is usually 1-1.5% of the purchase price with a minimum of 1500 euros.

Mortgage fees and Valuations

If you are considering to take out finance in order to purchase the property, I highly recommend that you use a mortgage broker.

They generally work very closely with the lenders and know the best way to structure and submit your application.
They generally have good relationships with the banks and are able to get better rates than if you were to walk into the bank and apply yourself.
The money you spend on a good broker is small compared to the savings you make on half a percent less interest over 20 years!

Good brokers start at around 700 euros and often have “no bond – money back guarantees”.
Before confirming the loan the bank will need to do a valuation on the property. This is usually around 400 euros.

In summary

You can aim to pay +-15% of the purchase price for all of the additional costs, fees and taxes associated with buying a property in Spain. However, it is important to keep in mind that the ongoing fees such as; community fees, garbage removal and rates and taxes etc. are very low.