The initial average cost is usually somewhere between 10-11% of the agreed sales price. These are normally paid on the day of the sale.
The costs of purchasing a property are broken down as follows:
- 8% Property Purchase Tax (payable to the Spanish Government.)
- 1% +IVA Legal Fees
- Notary Fees
- Land Registry Fees
If buying with a Spanish mortgage, be aware that these costs will increase to on average 14-15% of the agreed sales price.
Complimentary Tax* Purchasing a resale property in Spain currently incurs a Property Purchase Tax of 8%. The Tax Authorities may, at a later date, consider the declared purchase price is not a correct valuation. Using their own market valuation they may then issue a tax demand of 8% of the difference between the declared purchase price and their own market value, where applicable.The possibility of receiving a Complimentary Tax demand should not put you off purchasing a cheap property, however it is important to be aware that this tax exists. Castles can calculate the tax before a purchase so it can be included in the purchase costs and budgeted for accordingly.It is also important to note that you do have a month in which this complimentary tax demand can be appealed. Given the amount of money that can be saved and the very high success rate when appealing, this is becoming an increasingly popular route to take.
We strongly recommend as a purchaser that you use the services of a lawyer to guide you through all legal procedures. They will ensure the property will be legally registered and transferred into your name and that it is free of all charges. It is our opinion that arranging Power of attorney, whilst still in Spain is the best way forward. This allows the lawyer to arrange your NIE number, arrange relevant taxes to be paid and ensure that the property is registered with the Land Registry, arrange for you to be registered with the local Town Hall for payment of local taxes and also arrange for connection or change of name with all utility companies. The lawyer can also represent you in the notary, freeing you form travelling to Spain for the completion of the sale.
We are fortunate to have a sister company Castles Asesoria, this helps us to help you all the more, throughout and beyond the purchase of your property; from transferring cars, insurances, none resident taxes and Spanish wills. Castles provide an in-house service, making it much easier for you, by taking care of all kinds of transactions and paperwork. We have over 30 years of experience negotiating the Spanish systems which can remove the frustration of dealing with different (and occasionally inconsistent) procedures.