Expenses deriving from the purchase
The acquisition of a property carries with it a series of additional expenses, apart from the of the purchase price. As a rule, these expenses amount to 10-12% of the price of the purchase buying cash or 13-15 % when buying with a Spanish mortgage.
Below you will find a detailed description of the expenses you will be required to pay:
- Notary and registration expenses
The notary expenses are established by law and, as a rule, amount to somewhere between 400 and 1,000 €, whereas the registration expenses will lie between 200 and 600 € (depending on the price of the purchase).
- Lawyer's fees
The fees charged by the lawyer for the formalisation of the contract of purchase and sale usually amount to 1 % of the purchase price, increased by V.A.T. at the rate of 21 %.
The acquisition of a second-hand property is subject to Transfer Tax (I.T.P.) at the rate of 8-10 % of the purchase price stipulated in the public deed. The purchaser disposes of a term of 30 days as of the day of execution of the Notary deed to pay this tax.
- Real Estate Tax / IBIU Tax on Urban Real Properties
This is a tax payable to the municipality, calculated on the land registry value (between 0.4 % and 0.8 %).
- Capital Gains Tax
As a rule, at a rate between 0.2 % and 0.5 % of the amount of the purchase price indicated in the public deed.
- Income Tax
0.5 % of the land registry value, which is significantly lower than the purchase price.
- Other costs
Water, garbage, electricity, gas and residential development expenses, insurance, maintenance and administration of the property.
Expenses deriving from the sale
- Tax on the Increase of Value of Lands ("Plusvalía") (on the participation quota in the land)
Its amount depends on several factors (such as, for instance, the time elapsed between the acquisition and the sale, the estimated rate in accordance with the size of the municipality).
- 3% retention
As a non resident the buyer will retain 3% of the declared purchase price as a tax being paid to the tax authorities. This amount is a pre-tax the seller is required to pay by law. The buyer’s side is liable for transferring that amount to the tax authorities within 30 days after signing the deeds.
- Tax return of personal gains
Being non resident: After selling your property you have to do your tax declaration within 3 months after signature of the deeds. The capital gain (sales price minus purchase price) will be charged with an 19% tax. The previously retained 3% retention will be deducted from the capital gains tax.
Being fiscally resident: Similar to non residents, residents have to pay 19% capital gains tax. This tax will not apply if you are 65 years of age or older. Also the tax does not apply if you have lived permanently in the property you sell and you reinvest the money in a new property you are going to live in permanently.
If you require more detailed information, we will be pleased to clarify all your doubts in a personal conversation.
All legal information is subject to changes and without guarantee
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