Spain is considered
to be one of the greatest holiday destinations on the planet. The country is located in the southwestern region of Europe, just north of Africa.
Surrounded by the Atlantic Ocean on the western side and the Mediterranean
Sea on the southern side, Spain experiences nice weather
year-round. The pleasant weather, delectable food, and numerous cultural and
entertainment offerings make Spain a prime travel destination.
Although buying a property in Spain can be a great
choice, there are some expenses to take into account
in order to guarantee that it will be a smart investment. Here is a
list of the most common fees involved when buying a home in Spain:
Property transfer tax
If you are buying a new property you will
be required to pay VAT (IVA) and AJD taxes (Stamp duty). A new build is a property that is being sold for
the first time. For new builds, VAT (IVA) is currently set at 10% of the
purchase price. You will also be required to pay VAT if you purchase a
commercial property or a plot of land. In this case, the amount of VAT payable
is 21% of the purchase price.
Stamp duty (AJD) is
normally 1,5 % of the purchase price. However, it could vary depending on the
region where the property is located.
A resale property is
any property that is not being sold for the first time. In this case, you will
not have to pay VAT or stamp duty (AJD). Instead, you will need to pay transfer
tax (ITP), which is due upon signing the contract of sale. As a general rule,
transfer tax (ITP) is between 8-10% of the purchase price. However, many
regions apply
their own rate of tax, so
you will need to check with your region to determine the exact rate.
Notary costs
Notaries are essentially public officials
who play a neutral role in drafting and witnessing many types of contracts in
Spain. Notary fees are set by the government according to the number of
clauses in the deeds and the declared value of the property. In
general, Spanish law states that these costs should be distributed by the
signing parties.
Land Registry inscription fees
The surest way to protect title to a
property in Spain is to get it inscribed in the register, which buyers should
always check prior to committing to a property.
Spain’s Property Registry records all
deeds of sale that have been notarized and inscribed in the register. As is the
case with notary costs, the Land Registry cost is set by law and the amount
depends on the price of the property or right to be inscribed.
Lawyer fees
A Spanish lawyer can help you during the
buying process, carry out necessary due diligence, and arrange all of the
required documents to complete the process. A lawyer will charge you according
to the service you require. It is advisable to contact a lawyer at the
early stages of a sale. They will confirm their fees and will also
inform you about taxes, etc.
Estate agent fees
When buying a property through an estate agent, the
buyer will not have to pay any commission fees. Normally in Spain, it is the seller
who pays to the estate agent. Watch out for dodgy sales by tender tactics where
the estate agent tries to get fees from both the seller and buyer.
Banking fees
If you are paying for
your property with a mortgage, you will need to budget for a number of
additional costs. Fees depend upon the bank but is normally
1-1.5% of the loan.
IBI (Local Taxes)
IBI, or Spanish real estate tax, must be
paid by whoever was the owner on 1. January of the same year in which the
conveyance occurred. The purchaser will begin to pay the following year. The
amount varies based on location and the value of the property.
Community Charges
For those owning community property, such
as an apartment within a complex, there are maintenance and service charges to
pay. Potential buyers should consider these charges before purchasing. Charges
vary according to the size and quality of the complex, as well as the
facilities of the property, such as lifts, swimming pool, gardens, tennis
courts, etc.
Income Tax Provision
for non-residents (Seller)
If the seller is not a Spanish resident
they are required to pay 3% income tax provision, or retention, which goes
directly to the tax office to cover any taxes resulting from the sale. However,
the seller can claim for a refund if they believe that their tax liability is
less than 3%.
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