WHAT ARE THE ADDITIONAL COSTS BUYING A HOME IN SPAIN?
TO THE COST OF A SPANISH PROPERTY?
You have probably heard it recommended that you add 10% to the advertised price when you buy property in Spain. This is IVA, or VAT. But also add approximately 3,500 euros for lawyer’s fees and additional taxes.
Value Added Tax (IVA) is 10% payable on declared
value of property.
(VAT on new homes in the Canaries is known as IGIC (Impuesto General Indirecto Canario) and is 4.5%).
Stamp Duty (AJD) is 1% of the price of the purchase.
Transfer Tax. (Impuesto sobre Transmisiones Patrimoniales – ITP) is usually 7% and does not apply to new homes. If any deposit is paid before completion of the sale this is not subject to ITP pro rata. However, the full amount of ITP still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax.
Lawyer’s Fees. Your lawyer (abogado) drafts and reviews contracts on your behalf and explains all the legal and administrative matters. They carry out due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.) Legal fees for a purchase without any complications and charged on an hourly basis should be in the region of 1.000 to 2.500 Euros.
Administration Fee or sometimes called ‘After-sales fee’ or ‘Registration fee’. Let’s Live Abroad! do not charge administration fees.
Notary Fees usually 0.5% (or less) of the price declared in the title deeds (escritura).
Property Registry Inscription Fees calculated on purchase
price. Allow 1% but can be much lower.
WHAT WILL IT COST TO RUN MY HOME IN SPAIN?
The annual cost of running a home in Spain is usually lower than the UK!
Urbanisation Fee: This pays for communal areas including swimming pool, public lighting, green areas, security etc., and is arranged by the owner’s committee or Comunidad de Propietarios. You can apply to be a member of this group. A budget for annual community expenses is approved by a majority vote of all owners (or representatives) who are present at the annual general meeting of the Comunidad de Propietarios. Allow a few hundred Euros annually.
Property Ownership Tax (Impuesto Sobre Bienes Inmuebles – IBI). Equivalent to Council
Tax and is calculated on the basis of the valor catastral (rateable
value, often calculated at about 70% of the value of your home). The tax can be
0.4% – 1.1% of the valor catastral depending where you buy. An
apartment could be around a couple of hundred Euros annually.
Personal Income Tax (Impuesto sobre la Renta de No Residentes – IRNR).
Non-residents who own property in Spain have to pay an annual income tax that varies according to whether the property is rented out or not.
Not rented out: Income tax is based on the value of your property. The tax rate is fixed as 25% of 2% of the valor catastral of the property.
The tax on a property with a
valor catastral of 700,000 Euros would be as follows: -
Property value for tax purposes = 700,000 Euros
Taxable base (2%) = 14,000 Euros
Tax (25%) = 3,500 Euros
Rented out: Taxed at a flat rate of 25% of the gross income earnt from your property.
Insurance: House and contents can be a couple of hundred Euros.
Fiscal Representative or Gestor: You can appoint a fiscal representative to make your annual tax return in May and this person can also handle other payments such as local rates. It can cost a little over 100 Euros.
Utilities: Annual standing charges for electricity or water. These are usually metered and paid by direct debit.
Abroad! Ltd aim to be accurate as possible but recommend you confirm costs at
the time of buying in Spain.