Paying for your Property

You can also pay by cheque in foreign currency, or direct bank transfer from your foreign account to the seller’s account. Your lawyer will advise you of the most suitable payment method. Before you transfer money to Spain think about using a currency broker to save you paying a fortune in commission or losing out on exchange rates (read article: Buying Euros to Pay for Your Spanish Property)

Costs and fees of buying Spanish property

There is no Spanish law that requires that one of the parties must pay any particular tax. Traditionally the seller pays the notaries fees and the plus valia tax, while the purchaser pays the transmission tax or IVA and the registry fees. Your lawyer will negotiate on your behalf to ensure you only pay what is fair. The following is a breakdown of the taxes and fees:

Off-plan property

IVA. Impuesto sobre el Valor Anadido or Value Added Tax

Payable for the purchase of new build properties where the vendor is a developer, as well as for commercial premises and land. IVA is 7% for new build property and 16% for commercial premises and land.

I.A.J.D. Impuesto Sobre Actos Juridicicos Documentados or Stamp Duty

Payable only for on off-plan properties, set at 0.5% of the sales price.

Resale Property

I.T.P. Impuesto Sobre Transmisiones or Transfer tax

Payable for the purchase of any real estate where the vendor is not a Developer. Rates vary regionally between 6 – 7%.

Other Taxes and Charges

Plus Valia or Municipal Added Tax: This is a local tax on the increase of the value of the property since it was last sold. Legal obligation falls on the vendor, but it is an accepted practice that the vendor will try and pass the costs on to the purchaser. The tax relates to increases in land value only, it will vary from location to location. In practice this tax is quite small, however, if you are purchasing an older property ask your lawyer to check with the town hall to get an accurate estimate of cost.

Legal fees: minimum 1,200-1,800€ or 1% of the purchase value.

Notary fees: the scale is fixed by law and may range from 300€ for lower priced properties to 840€ for higher priced properties.

Property Registry fees: usually 60% of what the notary charges.

Connection charges: for electricity water, gas and drainage (usually between 250 to 500€)

Mortgage fees: generally the full cost of setting up a mortgage is between 1%-2% in Spain (read article: The Mortgage Guide).

Costs of purchasing a property in Spain are different to those in the rest of northern Europe, you should budget on 10 to 12% of sales price for the combined costs and taxes incurred. For a good break down of the costs and fees associated with buying property we will be providing a useful calculator shortly.

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