The 3 taxes to consider when buying a property in Spain are VAT, ITP and IAJD, in addition to this it is convenient to add the other expenses that correspond to us and thus do the accounts well. This is important to do, whether we buy as a residence or as an investment. For those who buy as a residence, it will be essential to take into account all the expenses so as not to be surprised in places such as the bank, the notary’s office or the registry. For investors, it will be vital to know all the expenses to be able to determine the profitability as faithfully as possible.
That said, let’s get to work and list the three expenses that we will have to make to buy a property in Spain:
At the national level, all notaries charge the same for each service, except for a maximum discount of 10 percent, which the regulations allow them to do. Notary fees are regulated by Royal Decree 1426/89 of November 17, published on November 28 in the BOE. For more information on notaries in Spain, we recommend you visit the page of the General Council of Notaries.
The expense represented by the notary will depend on the deeded amount of the property, its size and whether we buy with or without a mortgage, normally ranging between 600 and 900 euros for each necessary public instrument. If we buy without a mortgage, we will only pay the purchase-sale instrument. If we buy with a mortgage, we will pay the purchase-sale and the mortgage.
For example, if we buy a house with a mortgage of 120,000 euros, we will pay approximately 600 euros for the deed of sale and 750 euros for the mortgage. However, on January 20, 2017, due to the Floor Clauses the possibility has arisen for banks to pay the part corresponding to the registration of the mortgage, previously always paid by the buyer.
In any case, the notaries must give us an invoice indicating all the expenses that we are paying.
Similarly, at the Land Registry we will pay for each instrument. If we buy in cash, we will only pay the registration of the purchase-sale. While if we buy through mortgage credit, we will have to pay both the registration of the purchase-sale and the mortgage.
The costs of registering the property are lower than those of the Notary, and are also regulated based on rates approved by the Government and published in the Official State Gazette. For example, for homes whose deeded amount is between 80,000 and 1,000,000 euros, the registration costs will be between 180 and 500 euros approximately, for each instrument to be registered.
The first two expenses, Notary and Registry, are mandatory for any purchase of a property, either in cash or with a mortgage loan.
When we apply for a mortgage loan, the Bank will almost always require us to do the bureaucratic procedures with an Agency. They do this because as the property is the GUARANTEE of the credit payment, the Bank needs to ensure that the property has been correctly registered in the Property Registry. The expenses of the agency are independent of the deeded amount and depend a lot on each Agency. They are usually from 180 euros.
In conclusion, do not forget to add up all the amounts to be disbursed so that you can correctly calculate your profitability, in the case of an investment. We hope we have been able to help you.
This space is available to all investors and contains timely information on the real estate market in Spain. Our goal is for investors to be able to analyze their opportunities in the best possible way.
Geräh Real Estate Partners maintains market studies of different areas of Spain. You can consult us whenever you want about a specific area and we will give you our opinion.