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Fees & Taxes

Costs of buying property in Spain

Fees & taxes

A variety of fees are payable when you buy a property in Spain, which usually add a total of around 13 per cent to the purchase price, which is higher than in many other EU countries.

Most fees are based on the ‘declared’ value of the property, which was traditionally much lower than the actual price paid. However, under the ‘law of public fees’ (Ley de Tasas1989), it’s no longer possible to declare a very low figure and there are severe penalties for gross under-valuation. Local authorities maintain tables to calculate the current fiscal value (valor catastral) of properties and it’s this price (or the actual price paid) which should be declared.

The fees payable when buying a property in Spain may include the following:

Fees & taxes

Most taxes are paid by the buyer, with the exception of land tax (plus valía) and the selling agent’s fees. However, a contract may state that the buyer is liable for all expenses (todos los gastos), including plus valía. This is legal, provided the buyer agrees, as the law stipulates simply that expenses will be divided when they aren’t set out in the contract and who pays what fees is often a matter of negotiation. Always ensure that you know exactly what the total fees will be before signing a contract.

Transfer Tax

Resale property buyers must pay transfer tax (Impuesto de Transmisiones Patrimoniales/ITP) of a certain percentage. The percentage varies depending on the region where the property is situated, e.g. 6 per cent in the Basque Lands and Navarra, 6.5 per cent in the Canaries and 8 per cent in the remaining regions.

Land Tax in Spain

Fees & taxes

Land tax (Impuesto Municipal sobre el Incremento del Valor de los Terrenos, usually called plus valía) is a municipal tax on the increase in the value of land (excluding any buildings), since the last change of ownership. Traditionally, it’s paid by the vendor, as he’s the one who has made the profit. The amount of tax due depends on the population of the municipality in which the land is located and the number of years the vendor has owned the land, and bears no relation to the value of any buildings on the land. Plus valía is low on modern properties such as apartments and townhouses in urbanisations, where land values have increased little since the properties were built and little land is involved. It can, however, be high if you buy a large plot or a detached house with a few hectares of prime building land which hasn’t changed hands for decades. As taxes vary so widely, it’s impossible to give a simple guide to the amount you might have to pay.

Spanish notary’s Fees

The fees for the notary (notario) who officiates at a sale are fixed by law and are based on a sliding scale depending on the sale price, except for when the deed doesn’t include one (i.e. when the property is a gift), when there are fixed fees for each document. The fees are usually from €320 to €700. If you’re buying a plot in order to build a house, you must pay fees for two deeds; one for the land and another for the building.

Legal Fees

Legal fees for the conveyancing involved in a sale are usually around 1 to 1.5 per cent of the purchase price for an average property. The actual fee may depend on the work involved, although there’s usually a minimum charge, e.g. 900€, and it may be negotiable on ‘expensive’ properties. Engaging a lawyer and paying legal fees is optional, but it’s highly recommended.

Deed Registration Fee and Land Registry Fee

Fees & taxes

This is usually between €180 and €500, although the first amount paid is a deposit and is often over-estimated, so you may receive a small refund.

Mortgage Setup

The mortgage setup fee is generally built into any mortgage that is taken for the purchase of a property. Normally the bank lending is 50-60% of the valuation of a property, or the Compraventa purchase price, whichever is the lesser, although some banks have now reviewed their lending criteria, and will now only offer 50%. Due to the economic climate at the moment, all mortgages are being passed onto the Risk Department at the Banks Central Office, and the timescale on any mortgage is now out of our hands – it is normal at the moment for a mortgage to take 7/8 weeks to be agreed. However, the valuation fee is now only paid when the mortgage has been agreed by Head Office, thus saving the buyer the 300€ fee for a valuation.

Utility Fees

In resale properties, you will have to pay for the cost of new contracts, particularly water and electric

Running Costs

In addition to the fees associated with buying a property, you should also take into account the running costs. These include local property taxes (rates); annual wealth tax, income tax on deemed letting income and a fiscal representative or tax consultant’s fees; rubbish tax; community fees for a community property; garden and pool maintenance (for a private villa); building and contents insurance; standing charges for utilities (electricity, gas, telephone, water); plus a caretaker’s or management fees if you leave a home empty or let it. Annual running costs usually average around 2 to 4 per cent of the cost of a property.

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