Taxes And Expenses When Buying A New Property In Spain

What Are the Costs and Taxes Involved When Buying a Property in Spain?

Buying a property in Spain is an exciting venture, but it’s crucial to be aware of the various costs and taxes associated with it. Beyond the purchase price, you’ll encounter additional expenses, including taxes and professional service fees, which can total between 10% and 15% on top of the property’s price. It’s essential to factor these expenses into your budget as you plan your purchase.

In this article, we’ll provide a comprehensive breakdown of the taxes and costs you can expect when buying a property in Spain. Please note that the tax rates and regulations may vary by region, but we’ll focus on the Costa del Sol in Andalucia.

Taxes on Buying a Spanish Property:

1. New Properties:

  • VAT (IVA in Spanish): 10% of the purchase price. For instance, if you’re purchasing a new villa in Marbella for €950,000, you’ll owe €95,000 in VAT.
  • Stamp Duty (Legal Documentation Tax/AJD in Spanish): 1.2% of the purchase price. Using the same villa example, this amounts to €11,400. Together, VAT and AJD add up to 11.5% of the property’s cost in Andalusia.

2. Resale Properties:

  • Transfer Tax (Impuesto de Transmisiones Patrimoniales/ITP in Spanish): The amount varies based on the property’s price and follows a sliding scale. On the Costa del Sol, it’s a flat rate of 7% for all properties. Additionally, ITP applies to other property types like garage spaces, with rates ranging from 8% to 10%.

Costs of Buying a Property in Spain:

In addition to taxes, you’ll incur various fees for professional services, such as:

1. Notary Fees:

  • These cover the preparation of title deeds and witnessing the signing by both parties. Fees are typically around 1% of the purchase price but may be lower in some cases.

2. Land Registry Fees:

  • The Land Registry officially records property ownership in your name, with fees ranging from 0.5% to 1% based on the purchase price and mortgage involvement.

3. Legal Fees:

  • Hiring a lawyer during the purchase process is highly recommended, costing around 1% of the property price, potentially more for complex cases.

4. Estate Agent Fees:

  • Usually paid by the seller, these fees can range from 2% to higher percentages, depending on property type and exclusive contracts. These fees are often included in the property’s purchase price so not something you have to think about when buying a property.

5. Gestoría Fees:

  • A gestoría helps with administrative tasks like tax payments, deeds handling, and utility transfers. They typically charge a fixed fee starting at approximately €100.

6. Banking Costs:

  • When transferring funds from your foreign bank account to Spain, you may encounter transaction fees. Using a currency exchange broker can help minimize these charges.

7. Mortgage Fees:

  • If you’re financing your property purchase, budget for bank charges, including a valuation fee (around €500) and mortgage-related costs, typically around 1% of the mortgage value.

Navigating the expenses involved in purchasing a property on the Costa del Sol can be complex, but our team at Meester Estate is here to provide expert guidance and information throughout the entire process. Feel free to get in touch to learn how we can assist you in making your dream home purchase a reality on the Costa del Sol. We have the best connections to lawyers and finance brokers to help you from A-Z.

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