In most foreign countries, when referring to acquisition costs, people often mention notary fees.
However, in Spain, the notary plays a different role. For instance, they are not legally obligated to perform administrative checks related to real estate transactions.
Spanish acquisition costs may involve various elements. Several parties, such as lawyers, real estate agents, and specialized advisors, are involved in a real estate transaction in Spain, in addition to the notary. What costs does the buyer need to pay to each party? What taxes must be paid? How can you get an estimate? Answers.
Real Estate Acquisition Costs in Spain
Buying a house or apartment in Spain comes with various types of costs, taxes, and fees. To get a general idea of the amount of acquisition costs, estimated acquisition costs are around 11% of the property purchase price, excluding advisory and guidance fees. In more detail, we can divide the acquisition costs into three main categories:
- Notary Fees
These include notary fees, property valuation costs, and registration fees. These costs are estimated at 1% of the purchase price, with a minimum of 1,500 euros.
- Taxes
- Advisory Fees and Other Costs
What are the costs when buying an existing property?
A significant portion of the costs and taxes goes to various government agencies. This amount varies on average, depending on each autonomous community, between 8% and 12% of the property price.
Which taxes are we talking about?
The main one is the transfer tax (Impuesto de Transmisiones Patrimoniales or ITP). This tax is paid for second-hand homes. It can even apply to a brand-new house, but if there has already been an initial transfer to a financial institution, the purchase is considered a second transfer, and no VAT is levied.
The management of the ITP is left to the autonomous communities, and the rate varies between 6% and 10%. You can check the rates on the website of each autonomous community. The rate is applied to the value of the transferred property.
In the case of documented legal acts (AJD), this only applies to used houses, at the time of taking out the mortgage, on its amount.
Now we also need to add the selling costs, such as:
- The public deed at the notary. Notary fees are regulated, and the costs depend on the value of the property, but they can be increased by factors such as the number of copies, the size of the deed, etc. A discount applies to social housing and subrogations.
- Registration in the land registry. These are the costs generated by registering the sale in the land registry. They are regulated, and the amount depends on the property’s price.
- Management. These costs include all administrative formalities and payments. This is especially important when the transaction involves a mortgage loan. Prices vary depending on the administrative tasks they need to perform, both for the sale and for the mortgage.
Costs for Mortgage Loan
It is common for many buyers to take out a mortgage loan. This incurs additional costs and taxes, depending on the financial institution with which you work.
- Opening a bank institution: These costs are charged at the time of granting the loan for the analysis of the viability of the transaction faced by the financial institution.
- House appraisal: This depends on the size of the property.
- Land registry: In addition to registering the sale, the mortgage deed must be added.
- Notary: The notary is the one who grants public deeds of sale and mortgage.
- Office fees: Administrative procedures (registration, payment of taxes, etc.).
- Damage insurance: The one applying for the loan must compulsorily take out damage insurance covering the appraised value of the property.
The closing of a mortgage loan is subject to the tax on documented legal acts (AJD), a tax that depends on the autonomous community and varies between 0.5% and 1.5% of the amount of the mortgage guarantee, as discussed earlier.
After checking all these concepts, it is recommended to have at least 30% in savings, as the mortgage usually represents a maximum of 80% of the estimated value of the apartment.
What are the costs when buying a new property?
Unlike an existing property, which we discussed earlier, the main tax when buying a new property is VAT. This tax belongs to the state and is 10% of the home’s price, and 4% if it is under official protection in a special regime. This VAT also applies to parking spaces purchased with the house, up to a maximum of two.
If new parking spaces are bought separately, a VAT rate of 21% applies.
In the case of documented legal acts (AJD), these are paid twice for new real estate transactions: at the time of purchase and at the time of the mortgage. Since it is transferred per autonomous community, they can set the percentage. This tax is levied on the legal documents required for the property transfer and corresponds to a percentage of the property’s value.
At present, it varies between 0.5% and 1.5% of the property price, depending on the property’s location. It also applies to the creation of the mortgage, specifically on its amount, also depending on the figure.
But this tax has many exceptions in each autonomous community. An example to prove this. In Andalusia, the general AJD rate on the loan is 1.5%, but if the buyers are under 35 years old and the loan amount is not more than 130,000 euros, 0.3% is applied when taking out the mortgage loan.
This means that a new house pays VAT (10% or 4%) and AJD (0.5% – 1.5%).
These are the taxes for a new or first transfer property, as for the costs, both for sale and mortgage, they do not differ from an existing property.
- Public deed at the notary
- Registration in the land registry
- Management
- House appraisal
- Commission for opening the mortgage loan
- Insurance
It is important to note that if the buyer purchases a new home from a developer and arranges the mortgage themselves (not mandatory), they do not have to pay costs for the property appraisal or the opening commission.
In total, with all costs and taxes included, the purchase of a new home without a mortgage loan adds about 13% to the property price.
Buying a new or existing property: What are the differences?
As explained earlier, notary and registration fees are the same regardless of the type of property being purchased. While these costs are comparable between buying an existing property and constructing a new one, the taxes future owners must pay differ.
Taxes when buying an existing property in Spain
This option has several advantages: immediately available, access to privileged neighborhoods, charm of the property, etc. However, property transfer tax will be paid, also known as “Impuesto de Transmisiones Patrimoniales” or simply “ITP.” This tax varies from 3% to 11% depending on the regions in Spain. For example, it represents 10% of the property purchase price in the Valencia region and 8% of the property amount in Andalusia, etc. Additionally, notary fees must be added.
Taxes when building a new property or buying a new property
When purchasing a newly delivered property or buying a new construction
