Expenses and taxes on the purchase of a property in Spain

If you are thinking about buying a property, you have probably only considered the price of the property to determine if you have the necessary budget to do so. However, it is essential that you also know the other expenses that are related to the purchase of a property, and which will influence the final cost. In this article we will show you what these expenses are and how much money you would need to cover them.

How much money do I need to have saved to buy a property?

To buy a property it is advisable to have savings of between 30% and 32% of the total price of the property you want to purchase. This means that, if the property has a value of 150,000 euros, the ideal would be to have saved between 45,000 and 48,000 euros.

Why is this percentage recommended? This percentage is due to the fact that, in most cases, buyers apply for a mortgage loan to finance the purchase of the property. Banks usually finance about 80% of the value of the property, so the remaining 20% must be paid by the buyer as a deposit. In addition, other expenses will have to be added to this percentage that will have to be paid during the transaction and that can add up to between 10% and 12% of the value of the property. We will now see what these costs are.

What are the costs of buying a property?

These are the costs that you will have to consider when buying a property:

• Taxes
• Notary costs
• Inscription in the Land Registry
• Mortgage costs
• Agency costs
• Real estate agency fee

Taxes

Taxes account for most of the mentioned 10% or 12%. The applicable rates will depend on the price of the property and whether you are buying a new property or a second-hand one:

• In the case of newly constructed properties, two taxes will have to be paid: VAT and AJD (Stamp Duty). VAT (Value Added Tax) represents 10% of the value of the property. In turn, the AJD (Stamp Duty Tax) ranges between 0.5% and 1.5% depending on the autonomous community.
• In second-hand properties, VAT is replaced by ITP (Property Transfer Tax). This tax is the responsibility of the autonomous governments and varies between 6% and 10%. The ITP and the AJD are not compatible, so in these cases only the fixed fee of the AJD will be paid.

If you want to know exactly what taxes you will have to pay depending on the price of the property, the autonomous community and the type of housing, we recommend you read our article where we talk in detail about the taxes that apply when buying a property. In addition, it is important to mention that during the purchase process the Municipal Plusvalia will also be paid. This is a tax on the increase in the value of the land that is transmitted and that must be paid by the seller.

Notary costs

To purchase a property it is essential to go to a notary; the notary will charge fees called tariffs for the preparation and validation of the corresponding deed. Although legally this expense should be assumed by the seller, it is very common that in practice it is the buyer who assumes all the notary costs. Usually, this matter is agreed upon in the deposit agreement, but if this is not your case, we recommend you reach an agreement before the signing of the deed.

The value of the tariffs is established by law, so all notaries of Spain charge the same for this service. The cost is calculated based on the value of the property and usually ranges between 600 and 1,000 euros. It is important to note that this document is essential to register the property in the Land Registry.

Inscription in the Land Registry

Once the deed of sale has been signed, you must register the property in the Land Registry, that is, put the property in your name so that you can register as a new owner. This procedure is not mandatory, but it is highly recommended, since it has certain advantages. However, it is mandatory for those who are going to apply for a mortgage, since the property will have to be registered in the Registry to be able to finance it.

As with the notary, the cost of this registration is regulated by law and depends exclusively on the price of the property, and may be around 300 to 600 euros.

Mortgage costs

Appraisal of the property

In the case of requesting a mortgage, the appraisal of the property will be mandatory, regardless of whether it is a newly constructed or second-hand property. This is carried out with the objective that the bank knows the real value of the property and determines the percentage of financing that will be granted. The appraisal must be carried out by an appraiser approved by the Bank of Spain and the fee is always assumed by the buyer.

It is complex to determine how much the appraisal of a property costs, since it is not regulated by law and the price can vary depending on different factors, such as the location of the property or the documents that the appraiser needs, such as plans or registry notes. As a guideline, the valuation could range between 200 and 600 euros.

Other mortgage fees

Some banks may charge an opening fee ranging from 0.5% to 1.5% of the loaned capital. However, currently, many banks offer mortgage loans without this commission.

As for the rest of the costs associated with the mortgage, such as those of notary, administration and the AJD, it is important to know that the Mortgage Law of 2019 established that it is the bank that must assume them in full. The buyer only must pay the copy of the mortgage deed.

Agency costs

Agency costs are the only optional costs in the process of purchasing a property. Normally the agency is responsible for the settlement of taxes and other paperwork, but you can also do them on your own, that is, you can decide whether or not to use this service. Agency administration does not have a fixed set cost, although it is usually approximately around 300 euros.

Real estate agency fees

If the purchase of the property has been made through a real estate agency, the buyer may have to pay fees that are usually approximately 3% of the value of the property. We say 'may' because this is not the same in all agencies as it is not regulated by law. In some real estate agencies this expense is assumed by the seller and in others it is divided between both. For this reason, we advise you to compare several options to be able to choose the real estate agency that suits you best.

Now that you have a clearer idea of the expenses you will have cover and the savings you need to do so, it is time to start looking for your new home. Find the perfect property for you among the more than 250,000 properties we have for sale and do not forget to use our price filters to adjust the search to your budget.