When starting your search for your ideal property you need to keep in mind all the buyings costs that you are likely to face, as well as ensuring that you have sufficient left over to pay ongoing monthly and annual bills. Here we review the costs you will face when you buy.
It’s true that the cost of living in Spain is still less than that of living in many other European countries, but you don’t want to leave yourself short when it comes to making the most of your property and enjoying your new life here.
To begin with you must take into account the on costs when purchasing your property. These can be divided into:
- External costs
- Legal fees for the purchasing process
Of course, each property is different and there are significant variations depending on where it is located. However, below is a general guide to what these costs might be.
The largest external costs are for the Spanish Notary and the Spanish Land Registry. The scale of Notary charges is fixed by law and will depend on the extent of the legal provisions in the Title Deed. However, we usually estimate that they start at around €800.
The Title Deed must be inscribed in the local land registry. The Spanish Land Registry or Registro de la Propiedad is a record of owners of Spanish property and ensures that there is a way of checking who owns what. The fee varies according to the value of the property but usually starts at €400.
In addition to these two external costs you might also have to obtain your NIE. The NIE is a tax registration number for foreigners that you need and you cannot open a bank account, buy a property or a vehicle in Spain without it.
Some people find it beneficial to obtain a Power of Attorney so that their solicitor can act on their behalf without them travelling to Spain when their signature is needed. Again, this comes at an additional cost.
The taxes you pay are dependent on the type of property you are buying. If it is resale then you will need to pay ITP at approximately 10%, depending on where your property is located.
If the property is a new build then you will have IVA (VAT) to pay at 10% and AJD (stamp duty) at 1.5%, again this will vary according to location.
Where a resale property is sold by a non-resident the legal requirement is for 3% of the purchase price to be retained by the buyer’s lawyer. This is paid to the Spanish Tax Authority and goes towards the cost of any capital gains tax. If there is no capital gains to pay then it can be claimed back.
You should be aware of the possibility of there being complementary tax. This is a tax that is sometimes levied following a sale when the price declared on the Title Deed is below that considered to be the real value by the Spanish Tax Authority. If you do receive a demand for this you can appeal.
You will need to build your solicitor’s fees into your budget. It is vital that during the buying process you are legally represented and that the property is checked for legality and any debts held against it.
You should not sign or pay anything until these basic checks have been done. Ask the solicitor you are considering to provide you with a personalised quote with no obligation; enabling you to decide who to appoint to this very important role.