Cost of buying a house in Spain

Q: What are the costs of buying a property in Spain?

There are a number of fees throughout the process of buying a property in Spain. Your initial costs will include either VAT and Stamp Duty (AJD), or just Stamp Duty (ITP). Then, during your purchase, you will also have to pay Spanish Notary Fees, Land Registry Fees and Legal Fees. Ongoing costs also include Annual Property Tax (IBI) and common bills such as water and electricity, and community fees. There are additional fees depending on factors such as whether you are a resident of Spain or the EU.

Q: How much tax do you pay when buying a house in Spain?

This depends on the type of property you wish to purchase. In general terms, if you are buying a new property, VAT and Stamp Duty (AJD) are costs you must pay. For a resale property (a property that has been previously owned), you must pay Stamp Duty (ITP).

Q: Is buying property in Spain a good investment?

From our point of view, it depends on the area of Spain where you want to make the investment, as well as the type of property you buy. For example, the city of Malaga, together with the Costa del Sol, is a very promising area; there are many fantastic aspects to this area, including the unbeatable climate, beach, mountains (hiking routes) and international schools. Moreover, there is a lot of demand for tourist rentals here, which explains why The Financial Times has placed Malaga in the 8th position of the most profitable European cities to invest in. Marbella, Fuengirola, Mijas, Nerja and Estepona are also very attractive towns for investment.

Q: How long does it take to buy a house in Spain?

The time frame for purchasing a house in Spain varies due to a variety of factors. However, it is estimated that the purchasing process can take anywhere from 3-8 weeks from the date of offer to completion.

One of the most popular questions our clients ask us when they contact our Tejada Solicitors team is “What are the costs of buying a property in Spain?”. Of course, the answer to this question depends on several factors, such as what type of property you want to invest in. The tax involved in buying a new property from a developer (VAT & Stamp Duty/AJD) differs majorly from buying a resale property from a private individual (Stamp Duty/ITP).

This article aims to highlight the different costs involved with buying a house in Spain from the initial buying process, all the way through to monthly maintenance costs.

Table of Contents

It is also important to note at this stage that if you decide to apply for funding (a mortgage), costs will be higher – some banks will provide you with a cost of buying a house in Spain calculator tool in order to provide you with an approximate idea of the costs involved with your property purchase.

Regardless of the above, the Tejada Solicitors team always advises their clients of all costs involved in potential purchases before starting the buying process. Our solicitors are experts in conveyancing – and along with tax advisors for international taxation and architects for urban planning – you will be provided with all of the necessary legal, fiscal and urbanistic information you need to accurately calculate what the costs of buying a property in Spain will be for you.

What costs are involved in buying a house in Spain?

The costs will be different depending on whether the purchase of housing in Spain is a new home to a developer or bank (first purchase/transfer), or conversely if it is a resale home (second purchase/transfer).

Costs involved with buying a new property in Spain

10% VAT: Villas, apartments, flats (including garages annexed to them), where they are purchased for the first time (new construction properties), and the seller is a developer or banker, promoter or usual trader for brand new properties. This type of property is accompanied by the payment of 10% VAT on the purchase price.

1.2 % Stamp Duty (AJD): The rate varies according to the autonomous community where the property is located (villa, apartments, flat with attached garage – maximum of two annexes).

For the properties located in Andalusia, the current rate is 1.2%.

Cost involved in resale home buyings in Spain

In these cases, we are dealing with purchases of homes that have been transferred previously, and usually the grantee is an individual, but not always so because in Spain in crisis situations banks often transfer second-hand homes.

Stamp Duty for a resale home (ITP).

This must be supported by the buyer, and the tax rate that is paid depends on the autonomous community where the house is located to be acquired. This is a different rate to the Stamp Duty of new homes (AJD).

Andalucia Stamp Duty (ITP)

7% Stamp Duty for a resale home in Andalucia (Houses, Villas, Apartments, Flat and garages attached to the house with a maximum of two)

Vat (IVA) / Stamp Duty (ADJ)

Common costs accompanying the purchase of a house in Spain

Spanish Notary Fees

The notary’s fees are almost always paid by the buyer, and are calculated according to the number of pages that the deed contains, the value of the property, and the number of documents attached to the deed. For this type of expenditure, it is difficult to provide exact numbers, as the fees of the notaries vary depending on the area.

As a general idea to contextualise the fees you may encounter, we have estimated that if the purchase of a house is €200,000, the fee would usually be around €65, and for the purchase of a €400,000 property, the fees would be around €1,100.

Spanish Land Registry Office

Registering a property in the Land Registry is not compulsory in Spain. Nevertheless, the inscription in the Registry is the main means of legal protection for the holder of the property. With this act, the property will be registered legally in the name of the buyers. These services do not have a fixed cost established, but they are expenses that the buyer must take care of. For a general idea, if the purchase of a house is €200,000 the fees are usually around €420, and for purchase of a €400,000 property, the fees are around €600.

Legal Fees

We recommend that you contact both a lawyer and a tax advisor so that together they can advise you and carry out all of the necessary steps involved in a property purchase. These include Conveyancing or Due Diligence of the property, the processing of your NIE (National Identification Number), and representing you before the notary and in public identities. You can find out more about these crucial steps in our Property Conveyancing page with important information that may interest you.

Many lawyers charge 1% on the purchase price plus VAT. At Tejada Solicitors, fees depend on the area and the complexity of the matter. This will be assesed by our team based on the workload and the complexity of the sale. We pride ourselfs on offering the best legal advice at a reasonable price with 100% quality service. You can contact us with no commitment to get a quote.

Mortgage

If you are going to buy a house in Spain with a mortgage, we advise you to contact the bank before the purchaseso that they can calculate all of the costs related to the mortgage. The bank will then inform you about the guarantees and necessary requirements for the concession. Each banking organization has its own norms and requirements.

Banking Costs

To make the purchase, it will be required of you to open a bank account in Spain, where you will need to transfer your money from your home country to Spain. This money transfer involves an international transfer cost, especially if it is a currency other than euros. In these cases, to reduce banking costs, we recommend contacting a broker specializing in foreign exchange.

Interesting read: Cost of selling a house in Spain

GET AN ONLINE CONVEYANCING QUOTE

Income Tax Provision when buying from non-residents

Income Tax Provision is part of the purchase procedure, but it is technically not an expense for the buyer. If the seller of the property in Spain is not a resident, the individual buying the property (resident or non-resident) must withhold 3% of the existing purchase price and pay it to the tax authorities as the IRNR (a Spanish non-resident tax regime). The purchaser will be exempt from the 3% withholding tax if the transferer provides a certificate from the Spanish tax office certifying the Spanish residency.

Municipal capital gains (Plusvalía municipal): This is a tax that, by law, corresponds to the seller. However if the seller of the property does not reside in Spain, the buyer becomes a substitute when it comes to liquidating the Municipal Tax on the increase in value of land. This means that if the seller does not pay this tax, the buyer will be responsible for payment.

In order to avoid this possible tax claim against the buyer, our team at Tejada Solicitors will contact the Town Hall of the municipality where the property is located, and request the advance on the capital gain cost. This will mean that the amount for the fee will be retained from the seller at the time of signing the transfer deed. This will be done for all purchase processes where the seller is a non-resident.

In order to give an idea of what the costs of purchasing a property may look like in this context, we have provided a brief example. Let’s suppose that the purchase price of a house in Marbella is €320,000 and that the seller is a non-resident in Spain. We have consulted the Marbella Town Hall and the cost of the Municipal capital gain is €3,352. The buyer must pay the purchase price as follows.

Hall and the cost of the Municipal capital gain is €3,352. The buyer must pay the purchase price as follows.

Here are 2 examples with the approximate cost in the purchasing of houses in Spain in two contexts; the purchase of a home resale from a Spanish resident, and the purchase of a new house from a developer.

EXAMPLE 1: Buying a resale apartment in Nerja (second hand). Purchase Price = €180,000

EXAMPLE 2: Purchase of a new flat in Marbella (brand new property) . Purchase price = €180,000

**Note: Lawyers fees at Tejada Solicitors are priced according to workload and complexity. Please consult without obligation

Costs of buying a house in Spain calculator

The figures below merely represent an approximation of the tax cost (VAT, Tax Transfer, and Stamp Duty) that will be incurred when a residence in Spain’s autonomous community of Andalucia is purchased. Expenses such as notary fees, land registration office fees, legal fees etc are not included in the calculation.

PURCHASE PRICE

TYPE OF HOME:

NEW BUILDING
SECOND HAND

Tejada Solicitors advises the user that the calculator should only be used for guidance and not as legal or professional advice because the regulations that have been used to calculate the taxes related to buying a home in Spain are subject to modification by the government of Spain and the Autonomous Community of Andalusia. Tejada Solicitors disclaims liability for any results generated by the calculator.

Owning costs after buying a house in Spain

Local Rates or Annual Property Tax (IBI)

The Property Tax (IBI) is a local tax, and is calculated by multiplying the cadastral value of the property by a percentage established by each local council, which generally ranges from 0.3% to 1.1%. It is a tax that is paid on an annual basis, and the town halls usually send the corresponding payment letter by post. However, there are many occasions in which this receipt does not arrive or is lost, or even the client forgets to pay it within the established legal period. For this reason, Rosana Tejada from Tejada Solicitors advises that we help to set up a direct debit for this tax, in order to avoid any potential penalties and surcharges.

Proportional impact:

At the time of purchase, many sellers, in accordance with the Supreme Court ruling of 15 June 2016, demand that the cost of the IBI for the year of purchase be charged proportionally according to the days that each party – buyer and seller – have been owners in a calendar year (January to December). This is something that can be easily negotiated with the seller.

As indicated, if you are buying a property and do not wish to have part of the year’s IBI bill passed on to you, make sure that the title deed states that the seller expressly waives this right

Example: Property tax rates in 2019 for a 50m² flat in Malaga were €82, in Marbella the property tax rate for a large villa is approximately €2,700.

Personal Income Tax (Impuesto sobre la Renta de No Residentes – IRNR)

Non-residents who own a property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.

Properties Not Rented

The calculation of this cost is made based on an imputed (estimated) income of 1.1% of the cadastral value (2% if that value has not been revised in the last 10 years) and then applying another percentage:

If the property has been rented during part of the year, the attributed rent (1.1-2% of the cadastral value) will decrease in proportion to the number of days during which the owner has occupied the property.

Renting out a property

Non-residents of Europe who rent properties in Spain must pay Personal Income Tax (IRPF). They can also discount some all the expenses arising from the property (in proportion to the period when the property has been rented).

For EU and EEA residents: 19% tax

Rest of the world: 24% tax (Non European member cannot deduct expenses)

Annual payment of Wealth Tax

Non-resident individuals who are holders of assets and rights (property, savings, bank accounts, bonds, shares, etc.) situated in Spanish territory must pay Wealth Tax (except in Madrid and Andalusia where this tax has been abolish), as long as the value of this wealth per taxpayer calculated on 31 December of each year exceeds €700,000. Like non-resident tax residents, they are entitled to a tax deduction of their €700,000.

Interesting read: Property condition survey before buying

Ongoing fees after property purchase in Spain

Rubbish collection and water rates

Rubbish collection is a local tax; each council approves its own rates and is calculated on a property by property basis. Water rates are local rates that are calculated according to water consumption in cubic metres.

Payment of these fees can normally be made by deposit in a bank account designated by the Town Hall, or by direct debit.

Community Fees

Not all the properties have to pay this fee. For example, the houses located in rustic land do not support this type of expense, as these are usually assigned to properties that are part of an urbanization or are part of a building (such as apartments). This fee will cover the maintenance of common areas like gardens, swimming pools and lifts, as well as for general security and administration expenses. This is usually a monthly payment that is calculated according to the size (m²) of the property that you want to buy.

Electricity and Internet

For expats who wish to buy a home in Spain, it is important to know that the cost of electricity and natural gas in Spain is among the highest in the European Union. This bill is paid every month or every two months depending on the electricity company provider.

This cost varies depending on the power contracted. In general, the average cost of an electricity bill in Spain ranges from €80-€100 per month in summer, and can increase to €130 per month or more in winter (due to extra heating costs).

On the other hand, the cost of the internet is very similar to the rest of Europe.

Home Insurance

This expense is not obligatory but is highly recommended. The price of home insurance varies depending on various factors, which may include:

Insured coverage
Square meterage of home <
Location of home
Whether the property is rented out for tourism purposes
Whether the property is used as a permanent residence.

The minimum cost of an insurance policy for a home valued at €300,000 would be around €350 per year, and for a 2-bedroom flat, a minimum of €190 per year.

Rosa Vega Delgado, lawyer at Tejada Solicitors, recommends that the seller asks for an annual breakdown of the costs related to the property. This is a simple way for the purchaser to have an overview of the annual costs related to the property.

Rosa Vega Delgado

Lawyer at Tejada Solicitors