Many clients do ask me about the cost of construction and being an architect it is a forthcoming question, nonetheless every now and again I do get ask for other costs associated to the actual purchase of a home, in which case I have done a little research and here are the results.
I have recently refresh my mind by visiting a very informative webpage at the “Idealista” portal where they sell an extremely large amount of dwellings mostly to Spaniards and I have found this very clear information which I would like to share with you.
The expenses of a home purchase.
• Public notary
• Registration with the Property Registry
• Taxes
• Gestoría (if we request mortgage)
• Document duties
The law defines what expenses are payable by the buyer (almost everything) and by the seller (only the municipal tax and the original of the deed). Normally there is little scope for negotiation, although it is true that any type of sharing of expenses can be agreed upon, including that all of them are paid by the buying party provided that it is done through a completely legal clause
When the seller is a real estate developer, the law obliges him to pay the municipal tax and the expenses of the declaration of new work and horizontal division. You must also pay the cancellation of the mortgage that may exists on the housing as long as you do not subrogate in it. The expenses in detail are:
1. Notary
Notary expenses are those incurred by the granting of the public deed of sale. Notary's costs are set by regulations and their amount depends on the amount of the property, although it can be increased by aspects of the notarial operation: number of copies, extension of the actual deed, if there is a mortgage involved, etc.
The notaries apply a fixed tariff that established the government in 1989 reason why all the notaries of Spain charge approximately the same fees. They can only give you a discount of 10%, so the competition between them is not much. The costs (or tariffs) in force for notaries are listed in the table below for private housing. It should be noted that in official public housing a reduction in tariffs is applied.
Please use these amounts as indicative. Do ask in your local notary for an exact quote.
Purchase amount Notary
25,000 € 600€
50,000 € 625€
100,000€ 675€
150,000€ 710€
200,000€ 750€
250,000€ 790€
300,000€ 830€
400,000€ 850€
975,000€ 875€
2. Property Registrar
They are the fees generated by inscribing the purchase-sale in the Property Registry. They are also set by regulations and their amount depends on the price of the property
There are variations that modify the general rules. For example, there are changes for public housing of, agricultural buildings, or for farms.
Purchase amount Notary
25,000€ 395€
50,000 € 420€
100,000€ 450€
150,000€ 470€
200,000€ 510€
250,000€ 550€
300,000€ 590€
400,000€ 630€
975,000€ 650€
3. Taxes
In this section we have to differentiate two large groups according to the type of dwelling
• Taxes for buying a new home
• Taxes for the purchase of second-hand housing
A) Taxes on the purchase of new housing:
• VAT (value added tax): when the house is handed over from the property developer for the first time, it pays VAT (currently at 10%). "First delivery" means those that are acquired from the developer after its construction.
If the homes have been rented after the completion of the works and are bought by the people who have lived there is also considered "first delivery", which would pay the VAT. On the other hand, if the buyers are different from the tenants they do not have this consideration and would pay their corresponding taxes as a second hand homes.
Buildings that are primarily for housing (buildings where at least 50% of the built area is intended for housing) can be paid a VAT of 10% (compared to 21% overall), including garages and annexes therein provided that the number of garage spaces for each owner does not exceed two units.
The currently established tax rates are:
10% in general or 4% in the case of public housing under the special regime or those developed by the local authorities.
• IAJD (Documented duties): this tax is generated by signing in the notary and later registering in the registry. The type of tax applicable will be determined by each autonomous community, in general terms it would be between (0.5% - 1.5%) on the purchase price.
This tax will have to be added to the VAT, so that new housing will normally pay (10% VAT plus IAJD (0.5% - 1.5%).
Please note that all costs provided in this article have been obtained from the “Idealista” and provided in good faith, however for best guidance I strongly recommend that you should obtain your own cost from a professional.
Expenses on a SECOND HAND home purchase.
• ITP (Property Transfer Tax: the tax levied on real estate sales is the alternative to VAT (IGIC in the Canary Islands) for second-hand housing
The amount is set by applying a percentage on the value specified on the deeds and depending on the autonomous region in which the home is located, is between (6% and 10%).
Or Patrimonial Transmissions (ITP) of the purchase (second hand).
• IAJD (Documented duties):
As in the case of new homes this tax is generated by signing in the notary and subsequently registering in the registry. The type of tax applicable will be determined by each autonomous community, in general terms it would be between (0.5% - 1.5%) on the amount of the sale shown on the deeds. (This amount is generally less than the actual price paid on the purchase)
• Gestoría: will only be paid if a mortgage is obtained to buy the property. The administrative manager performs all the necessary procedures until the inscription of the deed of purchase in the Property Registry
The agency is selected by the financial institution since it would not deliver the money until the purchase and the mortgage in the Property Register
Being free professionals, their rate is not regulated and may vary from one company to another. Typically, on the day of signing before the notary, a sum of money is requested to provide funds to be able to pay for all the procedures specified above. Once the purchase and the mortgage are registered in the Property Registry, the remaining money will be refunded.
Documented Legal Acts (AJD) of the purchase (new work - 1st transmission).
Finally, there is what is commonly called "municipal surplus value", which is the municipal tax on the increase in value of land of an urban nature and paid by the seller. This municipal tax, not to be confused with the tax surplus, taxes the increase of value of the lands of urban nature experienced during the years in which the seller has been the owner of the house. For the calculation of this tax it does not take into account the value of the purchase, nor the market value of the house, but the cadastral value.
It is calculated taking into account the cadastral value and the number of years that the seller has had the property (it has a maximum limit of 20 years) and cannot be less than 1 year. In case of over 20 years will be taken as a reference the maximum (20 years)
According to the law, it is normal for the seller to pay, unless otherwise agreed between the parties. There is a deadline of 30 calendar days from the date of that deeds are signed and payment is carried out it in the city hall.
All the above information have been obtained from the “Idealista” portal so I strongly advise that you obtain the guidance of a good English speaking Spanish solicitor on the Coast.
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