Published 23/03/2017 by Carrie Frais

Expert Opinion – What are the Costs of Buying Property in Spain?

Head of International Sales Karen Storms answers a client’s queries regarding the fees involved in buying a property in Spain, including some insider tips to avoid missing out on that all-important sale.

Lucas Fox Expert Opinion

Q. I am thinking of buying a flat in Barcelona. What are the things I need to consider such as upfront costs, how to get a Spanish mortgage, taxes, finding an independent lawyer and what other purchase fees there might be?

A. Buying in Spain is a fairly straightforward process as long as you have done your homework in advance with regards to the different stages of the buying process and the various fees involved.

We always advise that prospective buyers prepare everything in advance as there is nothing more frustrating than losing a property because the NIE (tax number) wasn’t obtained in time, a Spanish bank account wasn’t opened in time, the funds still had to be transferred to the Spanish bank account or your finances were not in order. In a multiple offer situation or for a property that has very recently entered the market it is essential to be prepared in order to seal the deal as quickly as possible.

Buying costs vary from region to region and whether also it is a new or re-sale home. VAT (IVA, Impuesto sobre Valor Añadido) and Stamp Duty (AJD, Actos Jurídicos Documentados) are applicable for properties that have never previously been occupied and plots. At present VAT is 10% of the purchase price for new residential properties and 21% for plots. Stamp Duty is a percentage of the purchase price which varies depending on the region, but the base rate is between 0.5% and 1.5%.

costs of buying property in spain

Karen Storms, Lucas Fox Head of International Sales

When buying a re-sale property from a private individual, Transfer Tax (ITP, Impuesto sobre Transmisiones Patrimoniales) applies. The general ITP rate varies from region to region, and is between 6% and 10%.

It is not obligatory by law to seek legal help for a property purchase but it is strongly recommended to do so. We advise finding a legal advisor prior to having selected the final property of your choice. He / she can explain and prepare the necessary steps from a legal standpoint and prepare all the administrative requirements for you including coordinating a Power of Attorney so that your solicitor can act and sign on your behalf.

Legal fees can vary due to the amount of work required by the solicitor but as a rough guide they can be anything between €1,000 and €10,000. Some lawyers bases their fees on a percentage of the property value. Notary and Land Registry fees can also vary depending on purchase price and the complexity of the deed. But you are looking at approximate costs of  €750 for Land Registry fees and €1,000 for Notary fees.

Don’t forget also that there are ongoing costs for property owners post-sale such as local taxes (IBI, Impuesto sobre Bienes Inmuebles) which are calculated on the cadastral value (set by the Town Hall) of the land. Community fees are only applicable when purchasing an apartment or a terraced house within a community of neighbours.

Non-resident income tax (IRNR, Impuesto sobre la Renta de No-Residentes) in Spain is paid if you are not a tax resident in Spain and applies if you own a property in Spain. There are two scenarios:

1)       The property is exclusively for personal use and you do not rent it out.

Although you do not earn an income from the property, in the eyes of the Spanish tax authorities you still derive a benefit from owning a property in Spain and therefore have to pay an annual income tax. The base for the applicable tax rate is generally 2% of the cadastral value of the property (lower than the commercial value). The tax rate is 19% for EU residents and 24% for non-EU residents.

2)      You rent out the property and pay tax for the periods during which it is rented.

The base for the applicable tax rate is the income that you receive from renting out the property. Various costs can be deducted if you are a tax resident in the European Union such as for property management and maintenance. If you have no other source of taxable income in Spain the tax rate is 19% for EU residents and 24% for non-EU residents.

There’s also an annual wealth tax based on the net value of  assets in Spain after permitted deductions, such as mortgages. The base for the tax is the net value of your property and other assets in Spain with a large tax-free allowance. This allowance can vary between regions (e.g. in Catalonia it is €500,000 for residents and €700,000 for non-residents per title owner on the deed). The tax rate works on a sliding scale with marginal rates starting at 0.2% and rising to 2.5%.

If you need to take out a Spanish mortgage, non-residents and residents alike need to provide standard documentation to be approved by the bank such as the tax return from the last 3 months, pay slips, bank statements and details of other loans and mortgages. Fees depend upon the bank but is normally 1-1.5% of loan. There is also the additional cost of the mortgage deed (approximately between €500 and €1,000) and the bank valuation of the property (approximately €800).

More information on buying property in Spain 

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