Embarking on the journey of buying property in Spain is a thrilling yet complex experience, particularly for expats venturing into the Spanish real estate market for the first time. The process varies from country to country, presenting unique challenges and considerations.
When purchasing a new property from a developer, additional costs like Value Added Tax (VAT or IVA in Spain) and Stamp Duty (Actos Jurídicos Documentados – AJD) come into play. VAT is currently 10% for residential properties and 21% for commercial properties and land.
Stamp Duty ranges between 0.5% and 1.5%, with a specific rate of 1.2% for properties in Costa del Sol. Both VAT and Stamp Duty are buyer responsibilities.
Transfer Tax (ITP) For resale properties, the crucial tax is the Property Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP). Rates vary between 6% and 10%, with Andalucia applying a 7% rate in 2023. The buyer shoulders ITP, excluding any deposit paid before completion.
Non-resident sellers prompt the buyer to withhold 3% of the purchase price, submitting it to the tax authorities (application form 211) to avoid potential capital gains tax liabilities.
Typically, sellers cover estate agency fees, but if a buyer uses a search agency, they may incur search fees. Agent charges vary from 5% to 7% of the sale price, often integrated into the sale price.
Hiring a lawyer is recommended to navigate legal complexities. Legal fees, around 1% of the purchase price, cover contract drafting, due diligence, and document arrangements.
Mortgage-related expenses, including property valuation and mortgage fees (around 1% of the mortgage value), apply if opting for a mortgage.
Buyers usually pay Notary expenses, approximately 1% of the purchase price declared in the deeds of sale.
Calculated at around 1% of the purchase price stated in the deeds, fees associated with inscribing the sale with the land registry are usually paid by the buyer.
Property surveys may incur additional costs. Allow for up to 15% of the purchase price to cover taxes and various expenses.
Opening a Spanish bank account and transferring money may cost up to 0.4% of the transferred amount. A banker's cheque could add another 0.5% cost.
In summary, thorough preparation and understanding of these costs—up to 15% of the purchase price—will empower expats to navigate the intricate process of buying property in Spain. Discover our beautiful region of Costa Calida with Murcia Dreams! Find out why buying a property in the Murcia Region is one of the most effective investments.
