What are the costs of buying a home in Spain?
Contents of this page:
>> Value Added Tax>> Solicitor's Fee
>> Notary's Fee
>> Connection to Utilities
>> After Sales Fee
>> Example
>> Rule of thumb guide
The first thing, of which you should be aware, is that you have to pay VAT (known as IVA in Spain) of 7% on all new property, and a transfer tax (known as ITP) of 7% on resale property. Either way, new or resale, the transfer tax is 7%.
Then there is the solicitor's fee, which is usually about 1%, but can be more if there are complications. If you do not want to make a journey to Spain especially to sign the contracts on the day of completion, then you may wish to give Power Of Attorney so that your solicitor can sign the necessary documents and make the necessary payments from your bank account. This will incur an extra fee, but you will probably save more than this on flights and hotel bills.
There is the Notary who will check that the documents are in order, that the parties to the contract are who they say they are, and who will witness the signing of the contract. The fee for this will be about 1% (which will include the 0.5% Stamp Duty), but will be higher if there is a new mortgage to be registered at the same time. The Notary cannot give you and is not allowed to give you advice; any questions you may have should be directed towards your solicitor who is there for that purpose.
You will normally be expected to pay the Plus Valia. (This is a capital gains tax levied by the local town hall and will vary upon the locality and on how long ago the land was previously sold). A typical amount would be 120 euros, although if you are buying a resale property that has been owned by a family for many years, this could be significantly higher. In theory, this tax is the responsibility of the seller of the property. However, because non-payment of this tax results in a charge being placed by the state upon the property (which the new owner would then have to clear), it is now the acceptable norm for the payment of this tax to be (quite legally) contracted to the buyer so that the buyer will know the status of this payment on conclusion of the purchase. In the event that the seller is offering to pay this tax, your solicitor may advise you that you should pay this instead and request to have the same amount knocked of the price of the property.
You should allow 150 euros each for the connection charges for the water and electricity. Occasionally, if there is a lot of work required in order to achieve connection, then the cost could be closer to 300 euros each.
Finally, there is our optional After Sales Fee of 350 Euros. We will liase with the banks, lawyers, Notaries, local authorities and utilities on your behalf, as well as assisting you in finding affordable furniture and fittings for your new home.
These are separate fees and will need to be paid for separately by you (or your solicitor on your behalf if you have set up a Power Of Attorney).
Let us take an example. Supposing you buy a property for 120,000 euros. The approximate costs will be:
Item |
Amount in Euros |
|---|---|
| Lawyer's Fees | 1200 € |
| Value Added Tax (IVA or ITP) | 8400 € |
| Notary's Fees | 1200 € |
| Plus Valia | 100 € |
| Connection of Utilities | 300 € |
| TOTAL | 11200 € |
Total 11,050 €, or just under 10% of the value of the property. This is just an example and each sale is different. However, if as a rough "rule of thumb" you allow about 10% for all these other costs (12% for properties under 70 000 €), then you are unlikely to be very far out.