The full cost of your property
Before beginning your search for that desirable property in the sun, you must at first consider the costs involved when buying a piece of real estate in Spain. These costs must be factored in on top of any purchase price. Below we outline the costs that will be incurred when buying a brand new property from a developer/builder and those in connection when buying a resale property.
New property from a developer:
VAT, (IVA in Spanish), this tax is applicable if the property is sold for the first time by a property developer. VAT is 10% of the purchase price when it concerns residential property such as apartments, villas, etc. and 21% in case it concerns plots of land without a building and commercial premises. Deposits and any other payments made prior to completion are subject to VAT,(IVA). The buyer pays this tax.
Stamp duty, (AJD in Spanish) is 1, 2% of the purchase price. The buyer pays this tax.
Transfer Tax (ITP in Spanish), this tax has to be paid when buying a property that has already been sold before and therefore is not from the developer. The tax depends on the Spanish Autonomous region where the property is located but in general it is 8% of the first € 400.000 of the sales price, 9% over the part between € 400.001 and € 700.000 and 10% for the part of the sales price over € 700.000. This tax is to be paid by the buyer in full on completion.
Costs for both resales and new developments:
Legal fees, your lawyer will look after your interests and can explain and guide you through the whole buying process. A lawyer usually charges 1% (plus VAT) of the purchase price.
Mortgage costs, when you want to finance your purchase (partly) with a mortgage on your property in Spain you will come across several extra costs. There is the valuation which your mortgage provider will require before approving the mortgage. This is to be paid for by the buyer and usually costs between € 250 and € 500. Secondly there are the costs of the mortgage itself. They vary by mortgage provider and other financial products you will buy with that same provider but usually there is an opening fee of 1% of the amount of the mortgage. Furthermore taxes will have to be paid plus notary, registration and legal expenses so it usually comes to 2,5% and 3% of the mortgage obtained.
A Notary is a public official who has the job of checking all the relevant paperwork is correct before they can be registered .These expenses are usually paid for by the buyer and are based upon the purchase price, the number of properties bought and the number of pages of the legal documents. You should take into account about 0.5% of the purchase price.
Plus Valia tax, this is a local tax based on the number of days a plot of land belonging to the property that is sold has been in the possession of the seller. The law states this tax has to be paid by the seller unless otherwise agreed upon. To get an indication of the tax to be paid the documentation has to be studied.
Power of Attorney.
Due to your lifestyle or work commitments there may be times during the process of buying your new home when you need to attend to sign documents etc. but arranging to do so is very difficult. In such cases the client can arrange for his Lawyer to act as his power of attorney and so act on his behalf. This service does incur a small cost.
Numero de Identidad de Extranjeros.(N.I.E)
In order to purchase a property here in Spain, you must obtain a Numero de Identidad de Extranjeros,(N.I.E) this is a photo I.D. card which contains a personal number which is used when dealing with all official matters e.g. paying taxes, opening a bank account, purchasing property or for identification purchases when using a credit/debit card at a point of sale. Your Lawyer can make the application for this important document in your absence.