Buying a property always involves an important amount of money. In this article you will find necessary details about the taxes and expenses when buying a property in Spain as a “non-resident”.
First of all, we need to differentiate between taxes paid for a new development property and those paid for a re-sale property.
Taxes when buying a new development property.
When purchasing new property, you will be facing the following taxes:
- The first one to consider is VAT (called IVA in Spanish).
If we are talking about a completely new property, VAT will be equal to 10% of the price (a property that is acquired directly from the developer).
- The second tax is the stamp duty (called AJD (actos jurídicos documentados) in Spanish) and it refers to the registration process.
It completely depends on the region in which the property is located, but it ranges from 0.5% to 2%. In Marbella, for example, is 1.2%.
Taxes when buying a second-hand property (re-sale)
But what happens if you are buying the property from the previous owner? Then you must consider the property transfer tax (Impuesto de Transmisiones Patrimoniales (ITP).
The amount you pay depends on where you buy a property in Spain. For example, in Andalusia, transfer tax on Spanish property is levied at a flat rate of 7%. In the Comunidad Valenciana, however, it stands at 10%.
This tax will be added to your agreed price and this is important to know, that all the deposits that are paid before the end of the sale won’t include the corresponding ITP tax. Everything is paid at the end.
Finally, if you are paying property tax you won’t be paying extra stamp duty (AJD). That is because property transfer tax contains the AJD tax within.
Additional expenses when buying a property in Spain
Now that we have the tax part laid out, let’s move tothe extra expenses you may be facing when acquiring your new house in Spain. The list that follows is common for each of the two cases we have analyzed before.
Not all of them may be applicable to your case, but you can use it as a checklist in order to make sure you don’t miss anything:
1.Notary expenses
Going and using the notary’s services will be required during this legal process. Because the notary is required to draw up the public deed.
The price you will end up paying to the notary depends on many factors, such as:
- The agreed price of the property
- If there is any mortgage
- The number of pages/sections the contract has
- How many parts the transaction divided in
- The notary itself
Nevertheless, we want you to have a clear image. So, expect to spend from 500 to at about 1.900€.
2. Registration costs: land registry fees
Once you finally pay for the property, you will need to register it in the Property Register Office.
The exact amount will depend on the exact region (again), but usually land registry fees are from 0,1% to 2% of the purchase price that is declared on the deed. Expect to pay around 500€.
This also refers to the simple note of registration, which is required to check the status of the property. It will be critical in order to gather relevant data about the property and about the previous owner.
3. Lawyer’s fees
We recommend you to have a lawyer next to you throughout the process, especially if your Spanish is not so good.
The lawyer may charge you a fixed price or a percentage that ranges around 1 % of the purchase price (plus VAT).
4. Change of utilities
One of the lasts steps in the process is to transfer the ownership of the utilities (gas, water, electricity, etc.) from the previous owner to your name.
Normally this part (as also the land registry fees) is inside the lawyer’s fees which makes your life much easier.
5. NIE number costs
Getting your NIE number is one of the steps to buy a property in Spain as a foreigner. It is the basic identification number for foreigners and you will need it to sign all the related contracts.
As well is usually inside the lawyer’s fees.
6. Open bank account and transfer money overseas to formalize the payment
This is something that can be forgotten, but still important.
Now you can make it easily even online, but any way you need to keep some amount of money there to make it alive.
Also is good to remember about the commission you will pay to transfer the money from your origin country to Spain to realize the payment.
Of course, the exact percentage will vary depending on the option/service provider you choose.
And here you are, the new happy owner of the property in Spain!
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
