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General regulation concerning costs & taxes of real estate in Spain
On this page we would like to inform you about the general regulation concerning costs & taxes of real estate in Spain. Your lawyer or financial advisor will explain all this more detailed, based on your specific case. In general, there are 3 different types of costs;
- Purchase costs
- Yearly costs
- Selling costs
Purchase costs
The prices of real estate in Spain are generally excluding charges and taxes. The agency fee is already included, since these are met by the seller.
As a guideline for the purchase costs:
New construction (first owner)
VAT (=IVA) – From January 2013 the VAT in Spain for the purchase of new construction apartments and homes increased to 10% (+ 1.5% stamp duty *temporary reduction to 1.2%).. The VAT for the purchase of a building plot is 21% (+ 1.5% stamp duty *temporary reduction to 1.2%).
Existing real estate in Spain
In the case of existing real estate in Spain you will pay a transfer tax (ITP), and not VAT.
Value until 400.0000 euro — 8%* temporary reduction to 7% —
Value from 400.000,01 to 700.000 euro — 9%* temporary reduction to 7% —
Value from 700.000,01 euro and more — 10%* temporary reduction to 7% —
- Example: property – purchase 600.000 euro:
For the first 400.000 euro (8%) — 32.000 euro —
For the 200.000 euro (9%) — 18.000 euro —
Totaal: — 50.000 euro —
Notary costs
The notary costs are variable, but this fee is documented in an official scale. For example, if there is a mortgage on the property, this will lead to extra costs because of the extra deed.
Registration costs
This is a cost concerning the registration of your property in the official Registro de la Propiedad (property register).
These costs are similar to the notary costs. Together they represent 1% of the total purchase amount.
Lawyer costs
Usually around 1-1.5% of the purchase price. Your lawyer will clearly explain you all procedures and costs and how they were made.
Yearly costs
At the final transfer of the property you will receive copies of all receipts of taxes on the property. Examples of this are:
The annual municipal property taxes (IBI = Impuesto sobre Bienes Inmuebles).
Legal fees
Using the service of a lawyer during the purchase process is highly recommended. Expect to pay around 1% of the price for legal services, more if the purchase involves complex negotiations or legalities.
Estate agent fees
Real estate agency fees are usually paid by the seller. Fees range from 2% to as high as 10% (or more) depending on the type of property and whether the agent has an exclusive contract to sell the property. However, since real estate agency fees are usually included in the purchase price, you don’t need to budget separately for them in your calculations.
Gestoría fees
Buying a property in Spain involves some paperwork, and it is usual practice to use a gestoría (paperwork and administrative services). The gestoría is responsible for a number of tasks including:
- Ensuring taxes are paid on your behalf.
- Collecting the deeds from the Notary and taking them to the Land Registry for registration in your name.
- Registering you for local council taxes and community charges.
- Transferring utility supplies to your name and setting up a direct debit for their payment.
A gestoría generally charges a set fee for their services, and it starts at around €100.
Banking costs
If you’re transferring money to Spain from your bank account in your home country, you may incur fees on the transaction, particularly if you’re transferring from a different currency to euros. Using the services of a specialist currency exchange broker can reduce bank charges – shop around for quotes.
Banks also charge for issuing the banker’s draft used to make the payment for the property when you sign the title deeds at the Notary. Charges for this can be high (don’t be surprised if you’re charged 0.5% of the cheque’s value) but are negotiable. Check with your bank before you order a banker’s draft to avoid unpleasant surprises.
Mortgage fees
If you’re using financing to buy your property in Spain, you’ll need to include bank charges in your budget. You’ll have to pay for a valuation – this usually costs around €500 – plus the mortgage costs themselves. These depend on the type of mortgage and the amount loaned, but as a general rule, expect a fee of 1% of the mortgage value.
Get expert advice
Understanding which taxes and costs are involved in a property purchase on the Costa del Sol is just part of the buying process. At M&W Real Estate, we offer comprehensive advice and information throughout the entire process. Get in touch to find out how we can help you buy your dream home on the Costa del Sol.
Would you like to know more? Just contact us and we’ll get right back you.
Conclusion
In conclusion, buying a property in Marbella can be a great experience and a good investment, but it is advisable to be aware of the potential pitfalls and avoid them. Working with trusted professionals, doing thorough research on the property and the area, and planning for all costs and taxes can all contribute to a successful and stress-free purchase.
M&W Real Estate has been advising clients on the purchase and sale of real estate for many years. We are a leading real estate agency in Marbella with a reputation for professionalism and integrity that we have earned over many years in the real estate business in Marbella. We are committed to providing an exceptional experience for buyers and sellers and strive for the highest professional standards in our industry.
Throughout the buying process, we make sure that all the steps are thoroughly explained so that there is no need for a problem.