What are the costs associated with buying a property in Spain?
When looking to purchase a resale property in Spain it is important to consider the associated costs and taxes. You can expect to pay 10-13% on top of the purchase price for these extra expenses which can often come as a shock as this is significantly higher than in the UK.
What are these extra costs and taxes?
The ITP tax is ‘Impuesto de transmissiones’ – this is sometimes erroneously called ‘Stamp Duty’ but it is a transfer tax set by each autonomous region. In Andalucia it is set at 8% on amounts up to 400,000€ and 9% thereafter up to 700,000€ after which this rises to 10% which is significant when you add this onto the purchase price.
Further to the ITP the other costs to consider are payment of the legal, notary and land registry fees. Normally conveyancing fees are around 1% of the purchase price plus VAT which in Spain is 21%. The notary and land registry fees are proportional to the purchase price and for the average purchase of a €200,000 property are around 2,000€ and 1,000€ respectively.
In Spain the most common method of final payment of a property on completion is via a banker’s cheque. Bank charges apply which depends on the amount of the cheque however in order to provide an example this would be around €300 for a cheque of 200,000€. This bank charge can sometimes be offset by purchasing a product from the bank such as home insurance.
A working example is provided below based on a purchase price of €250,000
PURCHASE PRICE: 250.000€
Transfer tax: 20.000 €
Notary fees: 2000 €
Registry fees: 1000 €
Legal fees: 3025€ (inc VAT)
Bank cheque: 300 €
TOTAL: 26,325 €
For those seeking a mortgage then mortgage set up costs also need to be taken into account when purchasing a property. There are different costs and taxes associated with the purchase of an off-plan or new property. In these circumstances instead of transfer tax VAT is payable at 10% in Andalucia.
To get in touch with Victoria, please contact Raanan Berlad