Additional Taxes & Fees When Buying in Spain
It is important to understand the purchase process and the additional purchase costs in Spain as it is different than in the UK and can vary a little from one region to another. In general, it is necessary to budget 13% - 14% of the purchase price for these additional expenses.
Transfer Tax (ITP)
This is applied only to the purchase of resale property and is payable at 10% of the purchase price.
VAT (IVA) and Stamp Duty
This is applied only to the sale of new build property. VAT (IVA) is payable at 10% of the purchase price and stamp duty is also payable at 1.5% of the purchase price.
A Notary is a legal representative of the Spanish Government. They will witness the signing of the title deeds (Escritura) and register the property in your name with the Land Registry after ensuring all payments and taxes have been paid. Their fee is usually between €500 and €1500 depending on the value of the property, often less than 0.5% but could be up to 1% of the price declared in the deeds. The fees are higher if you are buying with a mortgage.
The Land Registry fee is around half the cost of the Notary fee.
It is strongly advisable to appoint a Lawyer to represent your interests. They will draft and review contracts and will explain all the legal and taxation issues in addition to carrying out all necessary due diligence; confirming ownership, charges and outstanding debts. They will also arrange property registration and tax payments for completion. These fees can vary but are generally between €1000 and €3000 including IVA but this can depend on the complexity of the purchase.
It is possible for UK buyers to obtain a mortgage in Spain of up to 70% of the property’s value for non-residents and up to 80% for residents depending on your circumstances. Rates obviously vary but can range from around 2-4%. There are additional fees that need to be accounted for when buying with a mortgage; a valuation of the property is normally required, this can cost €300 to €600 and a lenders commission of around 1-1.5% of the capital loaned. Purchasing with a mortgage will also increase the Notary and Land Registry fees.
We would advise that you contact a mortgage broker when seeking finance. Although there will be additional broker fees to account for in the short term their access to more favourable terms with lenders will mean significant savings over the life of the mortgage.
Ongoing Taxes and Fees
As a homeowner in Spain, you will also need to account for the local council tax called IBI or SUMA depending on where you live and a rubbish collection tax. If you are part of a community or urbanisation there will also be community fees to consider in addition to electricity and water. It is important to check the property running costs before becoming responsible for them.