Buying a house in Spain can be both exciting and daunting, especially for expats who are moving abroad and purchasing property in Spain for the first time. The process varies from country to country and can differ significantly compared to where you are from. Beyond the price of the property itself, there are additional costs and expenses, such as property tax and mortgage fees, that need to be factored in. If you’re planning on buying a house in Spain, understanding the various taxes and fees for 2024 is crucial.
The Cost of Buying Property in Spain
When purchasing a property in Spain, a mortgage is not the only significant expense. Banks in Spain generally finance 80% of the property’s value if it will be used as your primary residence, meaning you need at least 20% of the property’s value saved for the deposit. Additionally, there are other expenses and property taxes to consider before the purchase can be finalized. Experts recommend having extra savings of 10% to 12% on top of the mortgage deposit to cover these costs, depending on the property’s location and price. These additional fees apply even if you do not require a mortgage.
What Fees are Involved in Buying a Property in Spain?
When purchasing a property in Spain, several fees and expenses must be considered. These include:
- Property Transfer Tax or VAT: Depending on whether the property is new or a resale, this tax ranges from 6% to 10% for resales and is fixed at 10% for new properties.
- Stamp Duty: Typically between 1% and 1.5% of the property’s price.
- Notary and Land Registry Fees: These vary based on the property’s price and range from 0.1% to 2%.
- Legal Fees: Recommended for handling legal matters, these typically amount to around 1% to 2% of the property’s price.
- Additional Costs: These may include mortgage fees, real estate agent commissions, property surveys, utilities connection, and home insurance.
Budgeting for these expenses is essential to avoid any surprises. Consulting local professionals is advisable for accurate, situation-specific information.
Breakdown of Fees
The Notary
One mandatory expense in Spain is the notary fee, required for both new and pre-owned homes. Notaries in Spain perform duties similar to those of solicitors in other countries, and their fees are regulated by the state. These fees generally range from 600 to 875 euros, depending on the property price. For example, a 100,000-euro flat might incur around 850 euros in notary fees, while a 250,000-euro flat could cost about 1,000 euros.
The Land Registry
Registering the deed, signed by the notary, incurs a Land Registry fee, which is also regulated and depends on the property price. These fees typically range from 400 to 700 euros.
Taxes When Buying Property in Spain
Taxes are a crucial consideration when buying property in Spain. The tax amount varies based on the property’s price and whether it is new or pre-owned.
Taxes on New Homes
For new-build homes, VAT (known as IVA in Spanish) is applicable at a rate of 10%. This means an additional 10,000 euros would be required for a 100,000-euro home and 25,000 euros for a 250,000-euro home. In the Canary Islands, VAT (referred to as IGIC) is lower, at 6.5%.
Additionally, new homes are subject to the Documented Legal Acts tax (IAJD or AJD), similar to stamp duty. The rate for this tax depends on the Autonomous Community.
Table 1: Taxes for New Homes in Spain (2024)
| Autonomous Community | AJD | VAT |
|---|---|---|
| Andalucía | 1.2% | 10% |
| Aragón | 1.5% | 10% |
| Asturias | 1.2% | 10% |
| The Balearic Islands | 1.2% | 10% |
| The Canary Islands | 1.0% | 6.5% |
| Cantabria | 1.5% | 10% |
| Castile-La Mancha | 1.5% | 10% |
| Castile and Leon | 1.5% | 10% |
| Catalonia | 1.5% | 10% |
| Ceuta | 0.5% | 10% |
| Madrid | 0.6% | 10% |
| Valencia | 1.5% | 10% |
| Extremadura | 1.5% | 10% |
| Galicia | 1.5% | 10% |
| La Rioja | 1.0% | 10% |
| Melilla | 0.5% | 10% |
| Murcia | 2.0% | 10% |
| Navarre | 0.5% | 10% |
| The Basque Country | 0.0% | 10% |
Taxes on Pre-Owned Homes
For pre-owned homes, the main tax to consider is the Property Transfer Tax (ITP), which varies between 6% and 10%, depending on the region.
Table 2: ITP Rates for Pre-Owned Homes in Spain (2024)
| Autonomous Community | ITP |
|---|---|
| Andalucía | 7.0% |
| Aragón | 8.0% |
| Asturias | 8.0% |
| The Balearic Islands | 8.0% |
| The Canary Islands | 6.5% |
| Cantabria | 9.0% |
| Castile-La Mancha | 9.0% |
| Castile and Leon | 8.0% |
| Catalonia | 10.0% |
| Ceuta | 6.0% |
| Madrid | 6.0% |
| Valencia | 10.0% |
| Extremadura | 8.0% |
| Galicia | 10.0% |
| La Rioja | 7.0% |
| Melilla | 6.0% |
| Murcia | 8.0% |
| Navarre | 6.0% |
| The Basque Country | 4.0% |
Reduced ITP rates may apply to certain groups, such as large families, people with disabilities, and young buyers, depending on the region.
Additional Mortgage Costs
If you are financing your property purchase with a mortgage, be aware of extra charges such as:
- Property Valuation: Required to determine the mortgage amount, costing between 250 and 600 euros.
- Opening Fees: Some banks charge an opening fee of up to 2% of the loaned capital, though many banks now waive this fee.
Total Costs of Buying a House
The total costs, including taxes and fees, generally amount to 10% to 12% of the property’s price, depending on the region. For example, for a 200,000-euro house in Madrid, the estimated costs would be:
| Expense | New Build (€) | Pre-owned (€) |
|---|---|---|
| Notary (0.2% – 0.5%) | 1,000 | 1,000 |
| Registry (0.1% – 0.25%) | 500 | 500 |
| Agency | 300 | 300 |
| VAT | 20,000 | 0 |
| AJD (0.75% in Madrid) | 1,500 | 0 |
| ITP (6% in Madrid) | 0 | 12,000 |
| Total | 23,300 | 13,800 |
Pitfalls of Buying Property in Spain
There are several potential pitfalls when buying property in Spain:
- Legal Complexities: Understanding the Spanish property market and legal requirements is crucial.
- Unexpected Costs: Be prepared for various fees and taxes.
- Scams and Planning Irregularities: Conduct thorough checks to avoid scams and ensure compliance with urban planning regulations.
- Ongoing Maintenance and Market Volatility: Consider long-term maintenance costs and the potential for market fluctuations.
- Currency Exchange Risks and Tax Implications: Foreign buyers should be aware of currency exchange risks and residency-related tax implications.
To mitigate these risks, thorough research, due diligence, and working with reputable real estate agents, lawyers, and financial advisers are essential for making informed decisions and ensuring a successful property purchase in Spain.
Insights
- Regional Variations: Taxes and fees vary significantly by region. Understanding local regulations is crucial.
- Hidden Costs: Budgeting beyond the purchase price is essential. Additional costs like notary fees, registry fees, and mortgage-related expenses can add up quickly.
- Professional Guidance: Hiring local professionals, including legal advisers and real estate agents, can provide invaluable assistance in navigating the Spanish property market.
Disclaimer
This information is intended to provide a general overview of the costs associated with buying property in Spain in 2024. Actual costs may vary depending on individual circumstances and regional regulations. It is advisable to consult with legal and financial professionals for personalized advice tailored to your specific situation.
Read More: Idealista Price Report: An Essential Tool for Homebuyers and Renters in Spain
