Acquisition of real estate is not only an investment in the future, but also including expenses. This is important to understand before buying a home. The price of the issue is much larger than just paying for the cost of the object.
In addition, there are additional costs in the transaction process, which are borne by the buyer. Below are some of them:
– Notary fees
– Registration fees
– Agency / attorney fees
– Taxes
Notary fees (Escritura pública)
The public deed of purchase and sale is signed in the presence of a notary. At this point, the buyer is obliged to fully settle with the seller and this must be documented. After that, the new owner is given a notarized deed confirming the ownership of the property.
This cost item is fixed and directly depends on the cost of the object and other additional aspects, such as the number of copies required, the availability of guarantors, the size and complexity of the contract, etc. Notary fees vary from 600 to 1500 euros.
Registration fees
After completing the sale and purchase agreement with a notary and paying taxes, the next step is to register the document in the Property Register. This fee is also established by regulations and depends on the price of the object. The amount can vary from 600 to 1500 euros.
Fee
If the transaction is made through an agency or a lawyer, then the amount of the fee is usually 1% of the cost of the transaction, excluding VAT. But there are also lawyers who work at an hourly rate or a flat rate to check and conduct a standard real estate transaction.
Tax
Perhaps this is the most significant additional cost item when buying a home. The taxes applied depend on the type of the acquired property: new building or resale property.
When buying a new building, the buyer is obliged to pay VAT (IVA). Usually the rate is 10% of the asking price. It must be made at the same time as the purchase of real estate. In other words, an agreed and documented amount for the object + VAT is transferred to the developer company.
!!! But there are exceptions. So, in the Canary Islands, VAT has been replaced by IGIC and is 7% of the purchase price. In addition, some autonomous communities are reducing the tax for large families, which can be as high as 4%.
In addition to VAT, you will have to add Tax on Documented Legal Acts or Stamp Duty (IAJD) to the costs of buying a new home. The rate varies from 0.5% to 1.5% depending on the autonomous region of Spain and the value of the property. So, if in Madrid the maximum rate is 0.75%, in the Valencian Community it reaches 1.5%.
In the case of buying a second home, the buyer is required to pay the Property Transfer Tax (ITP). Its size usually ranges from 6% to 10% and depends on the autonomous region in which the acquired object is located. Thus, in Madrid the tax is 6% (4% in the case of large families), while in Catalonia it is 10% (5% for large families).
In addition, the Government of Andalusia has reduced the rate to a single 7% on secondary housing until December 31, 2021.
In aggregate, all additional costs and taxes are on average 10-12% of the amount of the acquired property. This is important to consider when setting the budget that you are planning to buy real estate.
As you can see, the final purchase price is influenced by many factors that vary depending on the region, type of housing and other conditions. A competent lawyer will guide you on other costs in addition to the purchase price, as well as offer tax optimization options for both the purchase and sale of real estate.
Our lawyers have extensive experience in conducting sales transactions and will introduce you to all the nuances that may arise in the purchase and sale process. This will not only save you money, but also time.