Purchase and ongoing costs Spain

Purchase and ongoing costs Spain

The “buyer’s fees” (also known as “notary fees”) generally include the total costs due in taxes and notary fees. These costs are twofold: one part the costs related to the purchase of the property and the second part related to the notarization of the mortgage. When buying existing construction in Spain, the rule of thumb that the total cost is about 12% of the purchase price is quite accurate. Please contact Mortgage & Abroad if you would like a detailed calculation of the cost of buyer.

Transfer tax and costs of registration in the registers(Imposto sobre Transmisiónes Patrimoniais en Actos Xurídicos Documentados) are payable when buying existing construction. In addition, the buyer pays the notary’s fee for his services. The scope of all the above elements are fixed in Spain.

New construction involves notary fees for the purchase of the land and notary fees related to the notarization of the mortgage.

It is highly advisable to hire an attorney to assist you during the buying process. A lawyer performs an indispensable role and takes on many tasks that in the Netherlands are performed by the notary. A good lawyer more than recoups his fee. We can put you in touch with a good Dutch-speaking lawyer

In addition to the cost of the buyer, other costs are often involved such as costs for an architectural inspection, the valuation, translations, legal, tax and financial advice and – if applicable – the formation costs of a Spanish company.

Once you own the house, you will owe local taxes annually: IBI. Basis of this tax is the cadastral value of the property and varies from region to region. The size of the IBI is between 0.4% and 1.1%. Also take into account the annual recurring costs, when purchased in a Spanish company. Annual accounting and tax consulting fees are then involved.

The gain on sale tax is a tax meant to discourage property speculation and is due when you sell the house at a profit. Currently (2022), gains on sale are taxed at 19%. In addition, there is the plusvalia tax. This is a tax on the increase in the cadastral value of land.

About equity put into a Spanish house, the tax treaty between the Netherlands and Spain agrees that Spain may in principle levy taxes on that. Specifically, the house does have to be declared in the Netherlands in the tax return, but a “double taxation avoidance” is applied that makes the net value of the house not included in the box 3 calculation. In contrast, wealth tax is levied on real estate assets in Spain(Impuesto sobre el Patrimonio) but there are high thresholds involved. Only when the thresholds are exceeded – and that is for amounts greater than €700,000 (as of 2022) – will Spain effectively start levying.

You can find detailed information about Spanish tax rules for non-residents at the non-resident section of the Spanish Tax Administration: https://sede.agenciatributaria.gob.es/Sede/en_gb/no-residentes.html