There are several required expenses and taxes to formalize the purchase and become the owner of the property.
Factoring in the property appraisal, the notary, the registry and the corresponding taxes (VAT, ITP…), it is recommended to save between 10% and 12%, depending on the autonomous community, the price of the property, etc.
All of these are mandatory expenses that rise from the purchase of a property, although the ‘bill’ to be paid will depend on whether it is a new or existing property and its cost.
Purchase costs:
Notary office
One expense to take into account when buying a property is the notary fees. These notary fees are regulated by the state and all notaries charge the same for the same services.
In the case of the execution of the public deed of sale, the prices are between 600 and 875 euros, depending on the price of the property. For example, for a 100,000 euro home you would pay approximately 850 euros, while for a 250,000 euro home you would pay approximately 1,000 euros.
The Spanish Land Registry
It also costs money to register the deeds that have been signed by the notary. Again, the fees are set by regulations and depend directly on the price of the property, although they usually range between 400 and 650 euros.
Taxes linked to the purchase.
The homebuyer must also have extra savings to pay taxes, although the amount will depend on the price of the house and whether it is new construction or not.
In terms of costs and taxes on the purchase of a new home, the most important tax is VAT, which in 2022 amounts to 10%. That is to say, it would amount to 10,000 euros in the case of a 100,000 euro home and 25,000 euros in the case of a 250,000 euro home.
A second tax must be added to the VAT: the Stamp Duty (IAJD, in Spanish). This tax is paid by the buyer.
On the other hand, for existing homes (not new construction), the most relevant tax is the Property Transfer Tax.
In this case, the amount depends on the percentage applied to the deeded price and the autonomous community in which the property is located, although as a general rule a rate of 6% to 10% is applied.
The appraisal of the property
To apply for a mortgage, you will have to pay an appraiser to value the property so the bank will know what percentage of financing can be granted.
In general, banks are lending amounts equivalent to 80% of the purchase price or the appraised value, although some are financing up to 90-100% of the purchase price, usually the lower of the two.
In 2022, the appraisal cost ranged between 250 and 600 euros, depending on the entity carrying out the appraisal, the type of property and its valuation. The appraisal is valid for 6 months from the date of issue.
With the introduction of the new Mortgage Law in 2019, the rest of the expenses are assumed by the bank: such as the notary’s office, the registry and the Stamp Duty.
Arrangement fee
This commission can be up to 2% of the capital loaned, depending on what has been agreed with the financial institution. This amount is deducted directly from the money given to the homebuyer.
Notary Office
Notary fees are those incurred for the execution of the public deed of the mortgage loan. This expense is assumed by the financial entity.
The Spanish Land Registry
There is also a cost to register the deeds that the notary has signed. Again, the fees are fixed by regulation. This cost is borne by the bank entity from June 2019.
The processing agency
The bank that grants us the mortgage is the one that selects an agency to carry out the administrative work and carry out all the procedures. As of June 2019, this cost is assumed by the bank entity.
The agency must return the surplus money to the homebuyer and deliver the invoices and the deeds after paying the notary and registry fees that are not assumed by the financial institution.
We remember again that the Stamp Duty is paid by the bank entity.
Conclusions
In this article we have discussed the costs of purchasing a property in Spain. We hope we have helped you and we hope you will share this article with anyone you know who would find it helpful.
