Additional buyers costs of sale

It can be very confusing to understand what needs to be paid, and how much and to whom. Here we consider the cost from a buyer’s point of view.

A) Additional buyers costs of a sale without a mortgage

Taxes

The majority of the cost is the tax arising from the purchase. In Spain the rate is calculated as 10% (Transfer Tax, ITP) for re-sale properties and 10% (value added tax, IVA/VAT) for new properties. In the case of a new properties a Stamp duty of 1,5% is also payable (Stamp Duty, AJD) making a total of 11,5% tax payable on new properties. In exceptional cases the tax may even be the general VAT (21%). However, this only happens in very few cases and we will not go any deeper into this point. The base for the calculations is the sale price and will always be the price stated on the deeds which are signed at the notary (deeds).

Notary Costs

In Spain the buyer pays the notary. These fees can vary, but to give you a general idea, in the majority of cases, notary costs can be between € 1.000 and €1.500.

Registration in the Property Register

A fee also has to be paid to make or amend an entry in the Property Register. Depending on the property this fee can be between € 300 and € 800.

Processing buyers costs for transmissions.

Fees are payable for transmissions and registrations, as well as changing all service contracts (water, gas, electricity, telephone, community fees…) into your name. Currently the fee is approximately € 1.100. Real Estate Altea does this changes free of any extra charge for its clients

Takeover costs

For new properties initial connection charges, of up to € 2000 for electricity, water and gas must be added.

Summary

In summary, you can expect to pay 11,5% or 12,5% of the declared sales price in the public title deed as purchase cost.

B) Additional costs in the case of sale with a mortgage

To obtain and register for a mortgage the following costs arise for the buyer:

Bank rates

First you have to pay for the property appraisal conducted by the bank. In normal cases this is between €250 and €600.

Bank commissions

To obtain a mortgage, banks generally have processing charges of between 0.5 and 1.5% of the amount to be borrowed.

Taxes

In Spain mortgages are also subject to a tax which varies depending on the amount of the mortgage, of just over 1% of the mortgage. To be exact, it is 1% of the mortgage amount plus the amount of the guarantee.

Notary expenses

The mortgage document is signed in front of the notary, which also incurs a notary fee.

Registration in the Property Register

The mortgage is registered into the Property register. The registration costs must be paid.

Insurances

The bank will require you to purchase time insurance for the property you acquire as this is the only way to guarantee the value of the property for the bank. The majority of banks will only accept policies from the insurance company with which they collaborate. Also, banks frequently request (especially when large credit amounts are involved) that an additional life insurance is purchased. The costs of this can vary immensely depending on the value, location and age of the property, as well as the age and personal situation, of the buyer.

Summary

For the mortgage tax, notary costs and registration costs, you should allow for between 2 – 3% of the amount of the mortgage plus an additional bank charge. All this results in additional expenditure of between 3 – 4.5% of the loan amount.

If you need any further specific advice please contact us personally by phone (preferably) or by email.