A Brief Guide to Buying Property In Spain

Spanish property transaction costs

On top of the cost of the property there will also be some transaction costs to pay. Transaction costs in Spain depend upon the type of property you buy, where you buy, and whether or not you use a mortgage. As a rule of thumb, transaction costs average 10% of the price of the property, but can be as low as 8%, and as high as 14%.

The various transaction costs are as follows:

Taxes

If you buy a resale property from a private individual, you only have to pay a transfer tax (ITP). If you buy a newly built property from a developer you pay VAT (IVA - if buying in The Canaries then the local equivalent of IVA known as ICIG) and stamp duty (IAJD). If you buy from an investor who has bought off-plan to sell on before completion then, for tax purposes, this is the same as buying a newly built property from a developer. These taxes vary by autonomous region, but are usually either 7% or 8%.

Notary and registry fees

Notary fees are set by the government, and are comprised of a fixed element, and a variable element, that reflects the price of the property, and the number of clauses in the deeds.  If you use a mortgage, then you will have to pay Notary fees on the mortgage deeds as well.

You also have to pay a fee to the property registry to inscribe your deeds in the register, including mortgage deeds if you are using a mortgage. As with the notary fee this fee is calculated on a sliding scale that reflects the price of the property, and the mortgage.

Notary and registry fees combined are often around 1% of the value of the property.

Legal fees

English-speaking lawyers often charge 1% plus VAT (at 16%) of the full property price for their service, as recommended by the lawyer’s association (colegio de abogados) in areas such as Malaga.

When hiring a lawyer you should find out what services are included in the price. Some lawyers offer a full conveyancing service that includes paying the taxes, inscribing your title in the property register and updating the cadastre. Others may just limit their service to checking the contracts, and accompanying you to the Escritura, and then charge extra for all other tasks. In the latter case you should use a gestor to carry out these tasks, as gestores charge less than qualified lawyers.

Mortgage costs

If you use a Spanish mortgage this will increase the taxes, notary and registry fees. You will also almost certainly have to pay an arrangement fee, often around 1% of the value of the mortgage.

© Mark Stucklin (Spanish Property Insight)

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