| | Buying cost’s explained | After a careful search you have finally found the property that ticks all your boxes and you have decided to go for it, so what happens now?
Once a price has been agreed you will be required to enter in to a purchase contract and pay a deposit, thus securing the property in your name. It would be normal to have to make at least one stage payment between signing the contract and completion, but don’t worry, we will clearly explain your contractual obligations to you and enter in to negotiations on your behalf.
Most of the paperwork and organisation required for the signing of the deeds will be taken care of for you by ourselves and your chosen solicitor. However, one important part of the buying process that you really have to understand carefully is the expenses that arise from buying a property in Spain. They could be very different from what you are used to in the UK and if you get it wrong, you could end up being caught short. | What are these expenses and where is your money going?
Read on for a simple explanation of what the
famous 10% consists of. | Property Sales Tax
The amount payable varies depending on the type of property in question and the nature of the vendor. If the vendor is a property developer the purchaser will pay
8% in VAT (IVA in Spanish) plus an addition 0,5% stamp duty. However, you should be aware that if you are buying a plot of land, commercial premises or a garage parking space then the amount of VAT rises to 18%.
In the case of a resale property, you don’t pay IVA, but you will have to pay the Impuesto de Transferencia de Propieded (ITP) or transfer tax which is also charged at 7%.
Notary Fees
Although it is not that uncommon for the notary fees to be a point of negotiation to secure a sale, they are usually assumed by the purchaser. At the time of the sale, it is only possible to give an approximation of what these fees might equate to but it would be fairly accurate to assume that they are going to amount to 0,5% of the sale price. The reason that you will not be able to get an exact figure is that there are many factors to consider which can bear an influence on the amount, from the notary office that is used, down to the number of pages used for the title deeds!
Land Registry Fees
Again, this is an expense that is usually covered by the purchaser although this is not set in stone and can be negotiated between the two parties. This can also only be estimated as until the deeds have actually been presented to the relevant land registry office for where the property is located, you will not be given an exact figure. However allowing 0,5% of the sale price will be more than sufficient to cover this.
Legal Fees
It is not compulsory to use a solicitor when purchasing a property in Spain however, we would certainly
recommend the use of one to all our clients. Solicitor’s fees vary from company to company, some charge a percentage of the sale price and others just charge a flat rate starting from around 900 euros for a basic service. Additional services are usually charged as an extra and these include for example obtaining a NIE number (a compulsory number that recognises you as a foreigner in the Spanish tax system) and doing a Spanish will.
It is important to get clarification from your chosen solicitor of exactly what their charge includes and ask for the cost of such extras.
Additional Expences
If you are purchasing a property with a Spanish mortgage, this will bring about further costs and instead of budgeting an additional 10% of the sales price to cover all your expenses, you should allow around 12% depending on the terms and conditions of the mortgage offer. This will cover the set up fee and official bank valuation of the property Refer to our section on mortgages for further information. | Example of the “true” purchase price for a property selling for 150.000 euros | Most people interested in buying a property in Spain are probably aware that you have to add ca. 10% of the sale price to your final budget to cover your purchasing expenses. | | Property sales tax |
8% = 12,000 | | Notary fees | 0.5% = 750 | | Land registry | 400 | | Lawyers fees | 1,560 | | Subtotal | 14,710 |
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