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1. Costs of Purchase and Transaction Taxes

When you are buying a property in Spain you need to know that in total your costs of buying the property will be up to around 10% of the purchase price.

If you are obtaining a mortgage, you can of course include these costs in the mortgage amount you request, providing this remains within the maximum percentage available against the property value and on your income.

EXAMPLE OF PROPERTY PURCHASE EXPENSES

The following is an example of expenses, incurred when purchasing and owning a property in Spain.

This estimate of 10% includes:

1. Your lawyer’s fees, which are likely to be 1000.-Euros for the work he does, plus the fees he has had to pay out, for example, for the Nota Simple, Certificación Registral, the Certificación Catastral, the notary fees for the power of attorney, etc..
2. The notary, registration and handling (gestoría) fees, which should together amount to less than 1% of the purchase price. Normally is 1000.-Euros more or less.

The notary charges according to a fixed scale depending on the size of the property and its price, and is likely to be around of £500. The fee for the registration will be around half of the notary’s fee). For example On a property valued around £100,000) the notary’s fee would be around £500), the registration fee around £300), and the handling fee (around £50)- in this case the three together amount to 0.85 % of the property value.

If you were obtaining a mortgage, there would be the same fees to pay for registering the mortgage deed, although the amounts will be less, as the mortgage will be less than the value of the property.

In addition, Stamp Duty is charged on mortgage deeds of 1%.

1. You will also pay the IVA ( VAT) of 7% on a new building. In addition, where VAT is involved, there is an Impuesto sobre Actos Jurídicos Documentados (stamp duty) of 1%.
2. If you buy a garage with the house you will pay the 7% and if you buy separately from the house, subject to a separate escritura, this will be regarded as a completely commercial transaction, and will be subject to VAT at the full rate of 16%.
3. If you buy a second hand house you will pay the Impuesto de Transmisiones Patrimoniales (TRANSFER TAX) of 7%.
4. There is also the Impuesto sobre el Incremento del Valor de los Terrenos (IVT) - commonly known as plusvalía after its original name the arbitrio municipal de plusvalía - a municipal value-added tax, which usually should be paid by the purchaser.

The plusvalía is based on the valor catastral of the land (i.e. not on the value of the building), and is levied on the increase in this value since the last sale.

Your lawyer will be able to find out exactly how much the plus valía will be from the local municipal tax office, which keeps records of land values. (This should not be confused with the capital gains tax which is payable by the vendor).

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