It is important from the outset that you are clear about what your budget should be for buying a property in Spain. Of course, it’s not just the cost of the property itself. There are a number of legal and tax obligations that you must meet to ensure that your purchase is problem free in the future.
These can be divided into:
- External costs
- Legal fees for the purchasing process
External costs of buying property in Spain
The largest external costs are for the Spanish Notary and the Spanish Land Registry
The scale of Notary charges is fixed by law and the actual amount to be paid will depend on the extent of the legal provisions of the Title Deed. As a guide we would say that charges normally start at 800 Euros.
The Spanish Land Registry (Registro de la Propiedad) is an official registry that protects the rights of the owners of a Spanish property. The title deed must be inscribed in the local land registry. The fee depends on the value of the property but normally starts at 400 Euros.
There are other additional costs of buying a house in Spain that apply in some cases depending upon individual circumstances. For example, if you have never had a fiscal interest in Spain before, you will need an NIE number before you can open a bank account or purchase your property.
You will also need a power of attorney if you are unable to be here in person and need to appoint an adviser you trust in Spain to act on your behalf.
Taxes in Spain
In addition to the external expenses there are also taxes to take into consideration when estimating the cost of buying property in Spain. The taxes are dependent on whether the property is new or resale.
|Type of property||Tax payable|
|New build||IVA (VAT) 10% Stamp duty (AJD) 1.5%*|
|Resale||ITP (transfer tax) 10%*|
* Dependent on where your property is located
Where a resale property is sold by a non-resident the legal requeriments is for 3% of the purchase price to be retained by the lawyer acting on behalf of the buyer. This is a legal requirement and is paid to the Spanish tax authority on account of capital gains tax. Where the seller has not made a profit, it can be claimed back.
Both new and second hand properties are also subject to Plusvalía. This tax is paid on the increase in the value of the land; the exact percentage is decided by the local tax authority. It varies according to location, the time elapsed since the last transfer of title and the land size. The Plusvalía is legally the responsibility of the vendor.
You need to be aware of the possibility of complementary tax. This is a tax that is sometimes levied following a sale when the price declared on the Title Deed is below that considered the real value by the Spanish Tax Authority. If you do receive a demand you can appeal.
Legal fees for the purchasing process
Finally, you will need to build the legal fees into the cost of buying property in Spain. It is important that you ensure that your interests are represented throughout.
An independent lawyer will give you advice and the reassurance that legalities are checked on your behalf during the buying process. Make sure that whoever you entrust with this very important transaction places your needs first and does not have a conflict of interests with other parties.
It is important to be able to communicate clearly with your lawyer who will ideally be a native language speaker. He/ she should be part of a respected and trusted firm, specialising in Spanish property law. You should be provided with a personalised quote with no obligation.
Moving your money
Moving money between countries can be costly. When you buy a house and transfer your money you can find that up to 3% of the total sale price is lost, adding to the cost of buying property in Spain.
For example, when transferring money to Spain, the bank will decide exactly when to move it and generally this will be at the exchange rate that is most advantageous for them rather than for you.
Using a SWIFT transaction means that another charge of around 0.6% will be levied. An alternative is using a currency exchange company which does not charge excessive amounts. They are able to do this because they keep funds in both countries.
You can deposit your money in an account in your home country and the money is then taken out of an account in Spain. It isn’t transferred because the money is already there. This means that it can be done free of charge – depending on the company you deal with.
For more information about buying property in Spain you can download our free property buying handbook.
Moreover, if you have any queries regarding property purchase and management in Spain, you can fill out this form and we will contact you as soon as possible, with no obligation.