A detailed list of the transaction and ownership costs related to buying, owning, and selling property in Spain. These need to be taken into account by anyone considering buying a home in Spain, as high transaction costs and property taxes in Spain can eat into your budget.
Be aware of these costs when you start looking to buy property in Spain, as you need to know what you are getting into before you start spending your precious time and money on what might be just a dream.
The next section will deal with the costs of selling property in Spain, as it is sensible to bear those costs in mind when you buy. The costs of selling property in Spain are part of the round trip of buying, owning, and selling property in Spain, but many people forget to take them into account when they buy.
It is important to have clear from the outset the real costs you will face when you buy property in Spain. It is equally important to be clear about the ongoing costs you will face as a property owner in Spain.
When it comes to the costs of buying and owning Spanish property you need to be well-informed and do your own numbers, rather than rely on the claims of others. Here I explain all the different types of costs, but actual costs will depend on your particular circumstances, and though I update these figures periodically, they may fall out of date for a while with the passage of time.
What are the costs involved in buying a property in Spain?
As a buyer of property in Spain there are a number of costs and taxes over and above the property price that you will have to pay. Depending upon whether you are buying a new property from a developer, or a resale property from a private individual, you will either have to pay VAT & Stamp Duty, or a transfer tax. The different cases are explained below, along with the other costs and taxes that are common to both cases.
1. Costs associated with buying a new home from a developer (or bank)
These are the costs you will face when buying a new home in Spain from a developer or bank. It doesn’t matter how long ago the property was built. To count as a new home it must never have been sold before.
1.1 VAT & Stamp Duty
In Spanish: IVA & Actos Jurídicos Documentados – AJD
These taxes apply for residential properties being sold for the first time (never previously occupied), or for commercial properties and plots of land. This is a national tax, so VAT is the same wherever the property is located (with the exception of the Canaries, which have their own version of VAT).
At present VAT (known as IVA in Spain) is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land. It was increased from 4% to 10% at the start of 2013.
VAT on new homes in the Canaries is known as IGIC (Impuesto General Indirecto Canario), and currently stands at 4.5%
The Stamp duty (known as AJD) is 1% of the price of the purchase, but might go up in some regions, so be sure to check on the latest rate. Both VAT and Stamp Duty are paid by the buyer, and if any deposit is paid before completion of the sale, such deposit will be subject to VAT at the moment of payment of this deposit. In this scenario there is no transfer tax to pay.
2. Costs associated with buying a resale home in Spain
These are the costs you will face when buying a Spanish property that has been sold before. Generally speaking, that means when buying a home from a private individual.
2.1 Spanish Transfer Tax
In Spanish: Impuesto sobre Transmisiones Patrimoniales – ITP
This tax applies if the property is deemed to be a second or posterior transfer (i.e. not the first time a newly built home is bought), and is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to ITP pro rata. However the full amount of ITP still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax.
The Transfer Tax rate is ceded to the autonomous regions, who can choose to apply the general rate, or their own rate.
The general (national) rule of ITP is 7%, but many of the autonomous regions have applied higher local rates. The rate you pay depends upon the autonomous region where you buy (for more information see Transfer tax on resale homes – Impuesto de Transmisiones Patrimoniales (ITP))
2.2 Income tax provision when buying from non-residents
If the seller is not resident in Spain, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not done the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.
3. Costs associated with both new build and resale property purchases in Spain
These are the additional expenses you are likely to face when buying any property in Spain, regardless of whether the property is new or not.
3.1 Estate agency Fees
Estate agency fees or commissions are paid by the seller, unless otherwise agreed. If the buyer uses a search agency then search fees are paid by the buyer.
Despite the ability of the internet to bring together buyers and sellers without the need for an agent most people still use agents to find property in Spain. However you should be aware that agents charge between 2% and 15% of the sale price, depending upon the region and type of property. Unless the buyer has specifically agreed to pay the agent’s fee this cost will be built into the sale price.
3.2 Legal Fees
You are strongly advised to hire a lawyer to help you during the buying process. Your lawyer drafts and reviews contracts on your behalf and can explain all the legal and administrative issues you face. Your lawyer should also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).
A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many charge around 1% of the purchase price in legal fees, though some will try and charge more. Even 1% can be unreasonably high given the work that is involved in a straightforward purchase of an expensive property with no legal complications. In that case your best option is to try and find a good lawyer who is prepared to charge on an hourly basis.
3.3 Spanish mortgage costs
If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This is paid for the by the buyer and can cost around 500 Euros. Then there will be the costs of the mortgage itself. This varies according to the provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Up until Monday 12th November 2018 you would also have had to pay Stamp Duty known locally as Actos Jurídicos Documentados (AJD) on new mortgages (a tax which varied by region, and can be as much as 3,000€ on a mortgage with a face value of 100,000€), but but a change in the law means that from now on AJD will be paid by lenders. Finally a mortgage will increase the Notary expenses. Rates may vary over time so always check the latest tariffs in advance with a lawyer before you commit. You can find more detail in the page on Spanish mortgage costs.
3.4 Spanish notary costs
Notary expenses are nearly always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale, plus other administrative and paperwork costs charged by item.
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. They also charge a small fixed fee for every copy of the deeds (copia simple) requested by the buyer, and fees for other administrative tasks. This makes it difficult to say in advance exactly what the Notary’s fees will amount to. However, to give you an approximate idea they range from 0.1% of the declared price of a property (for properties of 400,000 Euros or more) to around 0.4% (for properties of under 100,000 Euros). The Notary will also add on some other administrative and paperwork costs (that can add up to another 0.05% of the property price) and VAT at the standard rate of the time.
If you use a mortgage then you will have to pay Notary fees on the mortgage deeds as well. Once again these will range between 0.1% of the value of the mortgage (for large mortgages over 400,000 Euros) and 0.4% (for small mortgages under 100,000 Euros). Rates may vary over time so always check the latest tariffs in advance with a lawyer before you commit.
See the General Council of Notaries website (also available in English)
3.5 Spanish Land Registry Inscription Fees
This is the fee you pay to have your title (and mortgage, if applicable) inscribed in the Land Registry. Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. This fee is paid to the property registrar (registrador de la propiedad). You can find out more from the Spanish Land Registry online website in English.
As with the notary fee this fee is calculated on a sliding scale that reflects the price of the property, however you can estimate it as around 0.1% (for expensive properties) to 0.3% (for cheaper properties) of the declared price of the property. VAT at the standard rate is charged on the Registry’s fees.
4. Other costs associated with buying property in Spain
Though not strictly transaction costs like fees and taxes, there are other costs to bear in mind when buying a home in Spain. After all, they all come out of the same pocket – namely yours.
4.1 Banking Costs
To buy property in Spain you will almost certainly need to open an account with a bank in Spain, and may need to transfer money from abroad. There maybe international transfer costs – check with both banks – and if you need to exchange currency to buy Euros make sure you use a currency broker to get a good rate of exchange and overpaying for Euros.
Once you have got the funds in place, you will need to pay the vendor on the day you complete the purchase. The most common way to do this is to take a banker’s cheque along to the notary’s office to give to the vendor when you sign the deeds. Banks try to charge as much as they can for issuing banker’s drafts, and I’ve even known them to charge 0.5% of the cheque’s value. However, you can also get them for as little as €50 to €60. It all depends on the deal you have with your bank. Make sure you clarify this with your bank before you ask for the cheque.
4.2 Furniture Costs
Once you own a property you will need to furnish it. The cost of furnishing a property depends entirely upon what you want. However as a very general rule of thumb a 2 bedroom apartment will cost around 10,000 to 15,000 Euros to furnish nicely if you buy everything new. Of course there is no limit to how much you can spend, though you can also get away with less than 10,000 if you are on a tight budget (all from IKEA, for example).
4.3 Plusvalía Municipal Tax
This is normally paid by the vendor, but it can become a problem for the buyer if the vendor fails to pay it. Buyers have to be particularly careful with this tax when the vendor does not live in Spain. See the section below on costs to bear in mind when selling property in Spain for more information. Find out more about the plusvalia.
Before buying a property in Spain you may also wish to have a building or structural survey done, and that will have a cost. Find out more about building surveys in Spain.
In Summary, allow for between 12% and 15% of the purchase price in taxes and other costs, though it does depend what and where you are buying.
What are the costs of owning a property in Spain?
Owning property in Spain comes with costs, as it does everywhere. Some of these will be maintenance costs, such as cleaning, repairing, reforming, utility bills, rubbish collection, and so on. These will be determined by the size and type of the property you buy. A large villa with a garden and pool will require much more effort and cost to maintain than a small apartment. For cleaning a figure of 12€/hour is fairly typical in better-off parts of Spain like Barcelona, Madrid, Marbella, and the Balearics (in 2022).
Apart from the general maintenance costs referred to above, there are a number of costs in the form of taxes and fees that property owners in Spain face.
Property Ownership Tax
Spanish name: Impuesto Sobre Bienes Inmuebles – IBI
A local tax on the ownership of property in Spain, irrespective of whether the owner is a resident or not. Calculated on the basis of the cadastral value, in Spanish valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) set by the town hall the tax rate goes from 0.4% – 1.1% of the valor catastral depending on the Spanish region.
Annual Wealth Tax
Spanish name: Impuesto Sobre el Patrimonio
This tax has been changed several times in recent years. For the latest situation see Spanish Wealth Tax (Patrimonio)
Personal Income Tax
Spanish name: Impuesto sobre la Renta de No Residentes – IRNR
Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.
If the property is not rented out, non-resident second-home owners pay an ‘imputed’ income tax based on the cadastral value of their property. At the time of writing the tax rate was 25% of 2% of the cadastral value (valor catastral). So for a property with a cadastral value of €100,000 the imputed non-resident income tax would be €500 per year. Tax rates change over time so check with a Spanish tax expert for the latest rates.
If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty – if any – between Spain and the country of origin of the non-resident). In many cases non-residents simply pay a flat rate of 24.5% of the gross income they earn from their property in Spain, with no deductions allowed. This is the case for non-EU nationals, including the British after Brexit. Tax rates change over time so check with a Spanish tax expert for the latest rates.
Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income.
You should also check the website of the Spanish Tax Agency in English.
Owners of property that is part of any development, building, or complex in which common zones are shared with other owners are by law obliged to be members of the community of owners, known as the Comunidad de Propietarios. This will entail paying community fees for the upkeep of the common areas, and any other services that the community vote for. The fees will vary according to the magnitude of the common areas, the costs of maintaining them, and the services that the community vote for. A budget for annual community expenses is approved by majority vote of all owners (or representatives) who are present at the annual general meeting of the Community of Owners.
Household insurance will vary according to the circumstances of the owner and the type of property. However it should be born in mind as a cost that all property owners will face.
You are strongly advised to take out building insurance when you buy a property in Spain (if you use a mortgage your mortgage lender will insist that you do). Insurance premiums in Spain are lower than the UK and other northern European countries, and you can get a quote rapidly from any number of insurance brokers. If you wish to quantify your insurance premium before you buy you should find out what information insurance companies require to prepare a quote, and then gather this information during one of your visits or from the estate agent. You should also consider taking out content insurance, and mortgage insurance if applicable. If you plan to rent out your property you will need an insurance policy that reflects this.
Utilities costs in Spain
The owner of a rural property with a private well, solar panels, butane tank deliveries, a mobile phone and broadband satellite internet connection will not have to pay any utility charges. However most British people, who own properties in villages or urbanisations, will have to pay for water, electricity, gas and a telephone line. All utility connections involve a fixed fee for the connection, and a variable charge according to use. When buying a resale property you should be able to find out the utility running costs from the vendor.
Spanish Property Maintenance costs
All properties incur cleaning and maintenance costs that will depend upon the size, age and location of the property. A garden and a pool will also increase the time and expense of looking after a property. In many areas where the British tend to buy there are companies that offer a full cleaning and maintenance service.
Rental management costs
If you rent out your property you will need to hire a company to manage the marketing and rental of the property, though it is now possible to do some of the marketing and booking yourself via the websites that have sprung up to offer this service over the last 5 years. If you use a local company to provide you with the full service you will probably have to pay around 30% or more of the gross rental income to the company. As a non-resident you will not be able to deduct any of this fee for tax purposes.
Spanish Mortgage costs
If you take out a mortgage to buy your property you will have to meet monthly mortgage payments. These will depend upon the conditions of the mortgage you have taken out.
Before you even start looking for property for sale in Spain you should have a clear idea of the costs of ownership, so you don’t find yourself in financial distress after buying. Working out your Spanish property ownership costs and budget should be one of the very first things you do.
What are the costs of selling property in Spain?
Here are the transaction costs to bear in mind when selling property in Spain.
Plusvalia municipal tax
A special reference should be made to the local/municipal capital gains tax – known as Plusvalía. This is a local / municipal tax that only applies to the increase in value of the land upon which urban properties are built, and that is levied at the time of transfer of such properties. It is calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount to be paid will depend on how long the seller has owned the property: the longer the period of time during which the seller has owned the property, the higher the amount of tax.
This Plusvalía Municipal tax is usually paid by the vendor, but sometimes the buyer agrees to pay it – it’s part of the negotiation process. Be warned that if the vendor fails to pay it, the buyer then becomes liable for the unpaid tax, with interest!. Also, the town hall might not register the property for local real estate tax (IBI) purposes, until the Plusvalía is settled. That means the new owners starts accumulating unpaid IBI tax bills (without notification), plus penalties and interest, all without knowing it.
When the vendor is a non-resident, the law states the buyer is liable for this tax, even if the parties have agreed that the vendor will pay. So when you buy a property in Spain, especially from a non-resident vendor, make sure you or your lawyer checks that the Plusvalía Municipal has been paid by the vendor within 30 days of the sale.
The safest way to play this, from a buyer point of view, is to agree to pay this tax using funds deducted from the agreed sale price. That way the buyer can be sure the Plusvalía has been paid. This is particularly relevant when buying from a vendor who does not live in Spain (non-resident).
Capital gains tax
You have to pay tax on any capital gains when you sell property in Spain, as in other countries. For more information see the guide to taxes in Spain, section Spanish capital gains tax rates on property and other assets
If the vendor is a non-resident, there is also a Spanish withholding tax retention, which the buyer pays directly to the tax authorities, to cover the vendor’s capital gains liability
When buying and renovating property in Spain, always keep digital and hard copies of all invoices related to your purchase. Likewise, if you ever do building work on the property once you own it, keep copies of all licences and invoices. You may be able to offset these expenses against capital gains when you sell, and so reduce your Spanish CGT.
You can also find information in English on the taxes associated with buying, owning, and selling property in Spain at the Spanish tax office (if the link is broken it’s because the Spanish tax office often changes its website without leaving redirects!).