The costs of buying your home in Spain

The costs associated with buying a home in Spain are more than in the UK and will add about 10 to 12% to the purchase price. However, this figure depends on several factors.

The costs for the buyer and seller can be divided into four categories

·         State and local tax

·         Professional fees for lawyers, estate agents, and gestors

·         Property registration and notary fees

·         In addition, you may choose to pay for translators, valuers, and   surveyors.

Of course, the most important question is – who pays what? It is important to realise that Spanish law leaves the buyer and seller free to agree whatever terms they wish. Nobody is legally required to pay a given cost or tax during the transaction. However, failure to pay a tax can have some serious consequences – usually for the buyer.

Who pays what

Traditionally, and in the absence of an alternative agreement, the following applies:

The fees for advisors, estate agents, lawyers, surveyors, valuers, are paid by whoever contracts their services and then:

The seller pays:

·         costs involved in cancelling any outstanding mortgages or other charges

·         expenses of preparing the publicly registered title deed or escritura publica

·         local property taxes or contribución urbana (IBI)

·         local tax on the increase in the value of the property or impuesto sobre el incremento del valor de los terrenos – also known as the plusvalia municipal  

The buyer pays:

the first copy of the escritura

·         one of two sales taxes known as impuesto de la transmisión (ITP) in the case of resale properties at 6% or 7% (depending on the local state), and VAT or impuesto de valor añadido at 7% for new properties. Both sums are payable at the local tax office within 30 days of completion and are assessed on the declared value of the property in the escritura

·         government stamp duty or impuesto sobre actos jurídicos documentados at 0.5% of the declared value in the escritura

·         the costs of registering the property in the registro de la propiedad.

However, it worth restating, that if alternative agreements were made then they should be respected. A contract may state that the buyer pays ‘todos los gastos’ in which case the buyer picks up the tab for everything.

Buying costs in Spain

Let’s look at the approximate buying costs for a purchase of around €130.000.

To this you may have to add the local tax on the increase in the value of the property or impuesto sobre el incremento del valor de los terrenos – also known as the plusvalia municipal. While this is traditionally the responsibility of the seller, it may be agreed that the buyer pays

Calculating this tax can be a little tricky as it is charged on progressive scale that depends on the ‘official’ increase in local property values divided by the number of years the previous owner legally held the property. The increase in value can be revised downward if any improvements have been made. The total sum can be quite trivial or substantial. The local council should be able to give you – or your lawyer – a figure.

The vendor often tries to pass on this tax to an unwitting purchaser unless the purchaser objects and excludes such a provision from the sales agreement.

Plusvalia

The simplest way to guarantee that the vendor pays the plus valia is to agree with him in the contract that the tax will be deducted from the purchase price. If the estimated plus valia is a sizeable sum then it is worthwhile insisting on retaining the sum. The logic in the buyer paying is because if the seller promises to pay, and then ‘forgets’, the local council will hold the new owner responsible.

If you have decided to buy with a mortgage then you must add the stamp duties and various legal costs of preparing and registering the mortgage of around 1.5%, as well as a negotiable bank opening commission fee of around 1%.

One of the key factors in determining just how much it will cost to buy your property will be the purchase value you decide to declare on the official documents. More information on this controversial point can be found here.

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For more information on Valencia and our range of property go to:

www.rawlinsholden.co.uk or in Spanish at www.rhinmobiliaria.com

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