IN my last column, we looked, briefly, at what to take into account before purchasing a property in Spain. Now, here’s an overview of the expenses that will be coming out of your account to pay for your new home.
Aside from the, rather obvious, requirement of having the money, or the mortgage, that will be needed to pay the agreed price of your dream home in Spain, you should also set aside approximately an additional 15% of the sum to cover all the other costs for which you, the buyer, are liable when purchasing a property.
These can be divided up into three categories: fees paid to professionals; fees due to the Property Registry (Registro de la Propiedad); and taxes due to municipal and central governments.
Spanish lawyers normally charge 1%, plus VAT, of the agreed price for their services, which should include all the items listed previously: verifying ownership and description details in the Property Registry and the state property database for tax purposes (Catastro), confirming there are no impediments, taxes, or other liens that would affect the sale, checking the town hall has no planning issues or charges pending, drawing up deposit and purchase contracts (if required), and generally protecting your interests as the purchasing party.
For their services in drawing up and overseeing the signature of the public title deed (escritura) and payment, the notary usually charges around 0.2% of the agreed price. Thereafter, the cost of registering your purchase and transfer of ownership in the property with the Property Registry should be about two-thirds of the notary’s fee.
All taxes arising from a property purchase in Spain must be paid within 30 days from the date of signature of the public title deed. After this, buyers become liable for a surcharge of up to 20% of the tax in question. And, remember, prior to paying tax, foreign buyers need to obtain a NIE number (Número de Identidad de Extranjero), the foreign identification number required for all paperwork with the Revenue Service (Hacienda).
For resale properties, buyers must pay Transfer Tax (Impuesto de Transmisiones Patrimoniales), levied in line with a sliding scale, depending on the purchase price: 8% on amounts up to 400,000€; 9% from 400-700,000€; and 10% for amounts over 700,000€. A separate scale applies for parking spaces: 8% up to 30,000€; 9% between 30-50,000€; 10% from 50,000€ onwards.
For new properties, buyers need to pay, (i) 10% value-added tax (VAT, known in Spanish as IVA or the Impuesto de Valor Añadido) on top of the purchase price, and, (ii) 1.5% stamp duty (Actos Jurídicos Documentados).
Whether you’re buying a new or a resale property, if you are taking out a mortgage, you will also have to pay 1.5% stamp duty of the principal loan, plus interests and costs in case of non-payment.
If you are buying from a non-resident, you should retain 3% of the agreed price and deposit this with the Revenue Service with a period of one calendar after completion.
Finally, depending on the terms of the contract agreed between buyer and seller, as the buyer, you may also be liable for municipal land tax (plusvalía), as explained in the previous column. Once you’ve paid all the above, the home of your dreams will, at long last, be yours!