Costs of buying property in Spain

Costs directly generated

Buying a home generates many costs for the buyer in addition to taxes, and it is not always obvious why you are paying them or to whom, yet they add appreciably to the costs.

Who do you pay?

• To the seller you pay the purchase price, less any deposit already paid.
• The estate agent is paid by whoever contracted them, which is generally the seller. They are usually included in the sale price and so are only paid if the sale is made.
• The notary’s fees are divided, by law: the seller pays for authorisation of the deed and the buyer pays for the issuing of copies of the deed. The buyer must pay all notary fees only if expressly agreed with the seller. Fees are set by the Tariff and Regulatory Fee, but allow for 0.5% – 1% of the price declared in the deeds.
• If you are paying for the services of a gestor it is important to get the original invoice issued by the notary and the registrar, and the letter of payment of taxes, so that each party knows how much to pay for each of the services provided.
• The Land Registry. The buyer pays the level of fees corresponding to the registration of their right, and if agreed, of those corresponding to the registration of the mortgage. Registration fees are governed by a tariff, which you can ascertain at each registry office. Allow for 1% of the value on the deeds.
• Your lawyer. The usual range of fees for your lawyer–abogado–will be in the €1,500 to €3,000 range, but this really depends on the value and complexities attached to a property purchase and fees can be considerably more.
• Mortgage costs. This will include a valuation of around €500 plus the arrangement fee. It will also increase the notary’s costs as you will have to sign a different title deed.
• Bank costs. You will need to write a banker’s cheque or pay for a transfer of funds. Allow 0.5% of the funds transferred.

Before making any payment ensure you receive invoices breaking down each element of the bill, the IVA, the identity and Tax Identi cation Number (NIF) of whoever has issued them. For those issued by notaries and registrars, if you disagree with any of the charges you may appeal against them as speci ed by the rules that laid down the tariff.

Other costs

Municipal Tax on Increase in Value of Land in Urban Nature: Formerly known as “plusvalía”, this is a local capital gains tax based on the increase of the value of the land since the current seller bought the property and must be paid by the seller. The rate depends on the period of possession and the population of the town or city. Buyers need to be aware that if the seller is non-resident in Spain, if the tax is not paid then the buyer will have to pay it.

Property Ownership Tax (IBI): Formerly known as the contribución urbana, this is a local tax paid annually and based on the cadastral value (valor catastral) and according with the value of the land and the building, but usually much lower than the actual market value. Each Municipality decides the rate to be applied.

Wealth Tax (Patrimonio): Payable annually, based on the value of total net assets as of 31 December of each year, after the free allowance of €700,000. For non-residents, this will be based on the total value of their net assets in Spain. The rate varies from 0.24% to 3.03% at the time of going to press. As this tax is applied individually, if the property is owned by more than one person each of them will be taxed according to his or her share of the property.

Income Tax for non-residents (IRNR, Renta de No Residentes):

• If the owner rents the house they must pay 20% of the rent (24% if the lessee is a non-EU citizen).
• If the owner uses the house he or she pays 20% of the 1.1% of the cadastral value (2% of such value if it has not been revised since 1994). For non-EU citizens, the rate is 24% again.

Income Tax for residents (IRPF, Renta de las Personas Físicas): Any person is considered to be resident in Spain if he or she lives in Spain for more than 183 days per calendar year. In that case, you have to le your Income Tax annually, and declare all your income regardless of where the income was generated.

Estate Equity Income Tax (Ganancias Patrimoniales Inmobiliarias): Calculated on the difference between the purchase price, plus taxes and expenses, and selling price, minus taxes and expenses, and applying an update coefficient approved each year in the Budget. All non-resident sellers will have to pay 20% of such a difference, and are also subject to a withholding tax of 3% of the sales price, paid to the tax office.

Rubbish Collection Tax (Tasa de Recogida de Basuras): This varies according to each property and is usually paid once or twice a year at a rate set by the local council.

Water Supply and Sewerage Tax (Tasa de Abastecimiento de Agua y Alcantarillado): Payable at a rate set by each council, usually four times a year, this is worked out according to water consumption in cubic metres.

Costs other than taxes

Community expenses: for condominiums and urbanisations, as set and approved by the General Meeting of Owners each year.

Gardening and cleaning services: the costs of communal gardens and public areas of condominiums are included in the community expenses (see above). If paying for these services yourself, however, the amount will depend on whether the people are paid by the hour or are contracted full or part time. Don’t forget social security contributions too, an addition to the monthly payroll of around 40% of the salary.

Land telephone line and internet: Local and national companies will offer various deals and packages, which can include, in addition to phone and internet connection, also cable television. Such services are usually paid monthly.

Electricity is paid monthly, with a basic rate payable whether the property is occupied or not, and a minimum that will vary according to the estimated use.