Transfer Tax (or IVA (local VAT at 16%) plus Stamp Duty when buying from a developer)
Property Registration Fees
NotaryPublic Charges
Legal Fees plus IVA
The seller is usually responsible for:
Own Capital Gains Tax on any increase in Escritura value
Plus Valia Tax – This is a local Town Hall tax based on the increase in the value of the land from when it was last sold. This is a one off payment. We have seen circumstances where this tax is paid in an agreed division between the buyer and seller or solely by the buyer. To avoid any confusion is important to decide at the outset of the purchase whether the buyer should be asked to shoulder none, part or all of it.
Selling Agent Fees – plus IVA - as agreed with the Estate Agent
A usual breakdown of the above budget for costs and expenses, of the buyer are as follows:
Fees
Notary Public Fees. These are charged on a scale of fees which, in turn, depend on the price of the property.
Property Registration Fees - Land registry. These are around 40% of the Notary charges.
Legal Fees - are normally charged at around 0.75% to 1.50% of the agreed purchase price plus 16% IVA. You should note, if purchasing off plan, lawyers have a tendency to charge 50% of their fees at the first stage being the signing of the private reservation contract and 50% upon the signing of the Escritura Publica de Compraventa.
Mortgage Legal Costs. It is important to discuss with your lawyer whether you are seeking a mortgage to complete the purchase of your property. Some lawyers will waive any additional charges incurred in their dealing with the mortgage papers provided that you take a mortgage at the same time as your purchase. If, having purchased without mortgage funds, you subsequently wish to raise a mortgage on your Spanish property, or re-mortgage, expect to pay around 1% of the loan sought in legal fees.
Taxes
Transfer Tax – around 7% for second hand properties. Interestingly for younger purchasers, the transfer tax reduces to 3.5% if the buyer is below 35 years of age and the property is to be their main residence.
IVA is charged at 7% for the purchase of a new property. However, if you are purchasing a Parcela or plot of land, garage or commercial building the IVA rate increases to 16%.
Impuesto Actos Juridicos Documentados or “Stamp Duty” is around 1% for new properties.
Plus Valia - according to the law it is the seller’s responsibility but please see above. Payment may from a few hundred €s for smaller properties to several thousand €s for large villas or plots. It must be remembered that this tax is calculated on the increase in value since last bought. You should therefore note that if the seller has held the property for a long time – particularly through the 1990’s and early 2000’s – a period of substantial growth - the Plus Valia may well be very high when calculated from last sales price to this sales price.
Mortgage Costs
If you are planning to complete your purchase using mortgage funding, besides from the costs of servicing the borrowing you’ll need to budget for the following additional costs:
Bank Valuation Fee -Calculated as a percentage of the valuation for smaller properties usually in the region of €400 to €750 plus IVA. Rising to 1% of the valuation for larger properties.
Bank Arrangement Fee – Often 1% of the mortgage amount.
Stamp Duty – Based on mortgage liability and usually around 1.8% of the loan.
Notary Public Fees – The mortgage needs to be signed and witnessed in front of a Notary in order to be effective. Notary’s fees for this role are calculated as a percentage of the mortgage liability.
Property Registration fees - Land Registry – The mortgage needs to be recorded as a charge against the property and fees will be due based on a percentage of the mortgage liability.
Please note that the information provided in this article is of a general interest nature and intended as a basic outline only. You are well advised to contact a professional for advice specific to your circumstances. Nothing contained in this article should be seen or taken as the writer or publisher providing legal or financial advice.
