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The Costs Involved |
In addition to the cost of the property there are other costs associated with buying a property in Spain. Typically, these will total approximately 10% of the property cost declared in the “Escritura” (see “The Buying Process”). Additionally, you will have to factor in the post transaction costs such as the annual community charges, etc. Your lawyer will advise you more specifically about these costs but here is a brief overview. The additional costs are made up of three taxes, two fees and charges from the lawyer. 1.- Transfer Tax If you are buying a re-sale property then you will have to pay transfer tax IPT (Impuesto de Transmisiones Patrimoniales), which is a tax charged on a property sale between two individuals. IPT is charge at 6% (7% in Andalusia) of the property value declared in the Escritura. If you are buying a new build property then you will have to pay IVA instead, the Spanish equivalent of VAT, as the sale is a business operation, not a private sale between two individuals. IVA is always charged at 7%. 2.- Stamp Duty In addition to either the IPT or IVA, you will also be required to pay a documents fee or Stamp Duty of 0.5% (1% in Andalucia) of the property value declared in the Escritura. 3.- Plus valia tax. This tax is called arbitrio sobre el incremento del valor de los terrenos, or plus valia for short. This is the locally assessed municipal tax on the increase in the value of the land since its last sale. Although this tax should be paid by the vendor, the certainty of collection of this tax (in the past non-resident vendors have often left the country leaving the tax unpaid) has meant that it frequently falls on the buyer to pay this tax. It can be low, in the case of an apartment on an urbanisation, or high in the case of a home on a large plot of land not sold for say 25 years. On average, plus valia is about 0.5% of the property value. 4.- Notary Fees The fee charged by the notary is fixed by an official scale. This fee varies according to the amount of the land as well as the size and price of the property. You should typically allow for the higher of €350 or 0.5% of the property value declared in the Escritura. 5.- Property Register Fees This is the fee charged for the inscription of the property in your name in the official Registro de la Propiedad. It is typically 0.5% of the property value declared in the Escritura. 6.- Lawyer Fees This fee will depend on the amount of work the lawyer has to do. If the basic paperwork was straightforward the charge will be low. Conversely, if there were complications or the need to draw up multi-lingual contracts then the charge will be high. Legal fees of about 1% of the property value declared in the Escritura are considered normal. Case Study John Smith buys a re-sale property in Denia for € 200,000.
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