ALL YOU NEED TO KNOW – Purchasing Costs – Legal, Stamp Duty and other

PROPERTY PURCHASE COSTS:

 

The costs that a buyer will incur when purchasing a property in Spain will depend upon whether the property is a “resale” by an individual or a “new property” by a developer.

 

“RESALE” PROPERTIES:

 

The costs that will be payable by the purchasor are:-

“Impuesto sobre Transmisiones Patrimonales” (Transfer Tax) :

This tax is payable to the Regional Authority and is based on the price to be paid including any sum for furniture. Whilst the central government has set a general rate of 7% the Regional Authorities, which are autonomous, can set their own rates. Some authorities apply a band increasing tax rates for properties over a certain value. There can also be concessions on the rate of tax paid for certain groups such as first time resident buyers and the disabled. Most Regional Authorities apply a reduced rate of transfer tax on furniture.

The “Abogado” (lawyer) will advise on the amount of tax that would be payable on the proposed purchase. For the purposes of budgeting the cost of this tax allow for 9%. It could be as little as 7% but unlikely to be more than 10%.

Notary and ” Registracion de la Propiedad” (Land Registry) fees :

There are a scale of charges which are dependent upon the purchase price. Again the lawyer will advise you of these costs which are likely to be between 0.5% and 1%.

Lawyers Fees :

The lawyer will be able to advise the amount of these fees when details of the property to be purchased are known. For uncomplicated transactions this is likely to be between €1,500 and €2,500 to which must be added IVA (vat) at 21%.

Note: Most Estate Agents advise purchasors to allow between 10% and 11% of the purchase price to cover the above             costs.

There will be further costs for the estate agents commission and  bank fees payable for those purchasors obtaining a mortgage.

 

It should also be noted that if the vendor is not resident of Spain then an amount of 3% of the purchase price has to be with held and paid direct to the tax authorities .

 

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“NEW” PROPERTIES:

The costs that will be payable by the purchasor are:-

“IVA” (Vat):

Properties sold for the first time – not previously occupied attract a 10% IVA based on the purchase price. There is not an “Impuesto sobre Transmisiones Patrimonales” (Transfer Tax) levied on new properties.

“Actos Juridicos Documentados (AJD)” Stamp Duty :

This is in the order of 1% and is levied by the Regional Authorities. The rate can vary between authorities. The “Abogado” (lawyer) will advise on the amount of this tax that would be payable.

Notary and ” Registracion de la Propiedad” (Land Registry) fees :

There are a scale of charges which are dependant upon the purchase price. Again the lawyer will advise you of these costs which are likely to be between 0.5% and 1%.

Lawyers Fees :

The lawyer will be able to advise the amount of these fees when details of the property to be purchased are known. For uncomplicated transactions this is likely to be between €1,500 and €2,500 to which must be added IVA (vat) at 21%.

Note: Most Estate Agents advise purchasors to allow between 11.5% and 12.5% of the purchase price to cover the above costs.

There will be further costs for the estate agents commission and  bank fees payable for those purchasors obtaining a mortgage.

 

It should also be noted that if the vendor is not a resident of Spain then an amount of 3% of the purchase price has to be with held  as a retention to cover any possible tax liabilities or other charges that are the liability of the vendor.  This would be unlikely in the case of new properties where the owners are in most cases residents of Spain. The retention is released to the vendor if no claim has been made to the Fiscal Authorities normally after a period of 12 months.