Purchase costs
Purchasing a property in Spain, generates various costs. These costs are costs that are related to the taxes that need to be paid in order to purchase the property. Here is a clear overview of the costs that occur:
The Purchase Price
This is the price that is payed to the seller.
The Notary's Fee
0.5% of the purchase price. Need to be paid by the purchaser.
Attorney Fees
+/- 1% of the purchase price, subsequent to the attorney chosen.
Real Property Registry
Normally a standard fee but it can vary on the municipality the property is in. In most cases it is 1% of the value of the property.
Banking Expenses
Subsequent to the bank and form of payment chosen.
VAT
(value added tax) 10% for houses, 21% for land. The deadline for payment of this tax is 30 business days from the date of signing the public deed. - Stamp Duty (impost de Actos Juridicos Documentados AJD) generally whenever a property is subject to VAT the purchaser must also pay the other tax at 1.2% of the purchase price. It is paid to the seller with the purchase price and the seller will pay it to the tax authorities.
Property Conveyance Tax
(Impuesto de Transmisiones Patrimoniales, ITP) Property transfer tax. This tax does not apply to newly built properties where the purchaser will be the first occupant. The deadline for payment of this tax is 30 business days from the date of signing the public deed. In the Balearic Islands the rate is between 8% and 10% of the taxable base depending on the value of the conveyed property; it is 8% for properties under 400.000 euros, 9% for properties between 400.000 and 600.000 euros and 10% for properties of more than 600.000 euros.
Property Tax
(Impuesto de Bienes Inmuebles, IBI) TAX NOT RELATED TO THE PURCHASE PROCESS.
This is a yearly tax costs. This tax needs to be paid each calendar year on the 1st of January, even though the property is sold during the same year in another month. This tax is calculated on the estimated value by the Land Registry. The owner of the property is liable for all outstanding debts on the IBI of previous years, even though ownership of the house has changed. This debt is not subject to the owner, but to the property and its current owner. Therefore during the purchase process it is very important to check if all IBI has been paid the years before purchasing the property.
Mortgage Costs
(if needed). Property valuation (500€) and costs associated with the mortgage itself.
Extra costs of +/- 10% of the price of the property need to be taken in to account when setting a budget to buy a property in Ibiza.