Buying a property on the Costa del Sol Spain

7. Transaction Costs

In addition to the cost of the property, there will also be other associated costs to pay. These transaction costs vary according to the type of property, area and whether or not you will use a mortgage. As a general rule, transaction costs average 10% of the price of the property, but can be as low as 9% or as high as 14%.

The various transaction costs are as follows:

Taxes

If you buy a resale property from an individual, you only have to pay a transfer tax (ITP in Spanish). If you buy a new property from a developer, you will have to pay VAT (IVA) and Stamp duty (IAJD). These taxes vary according to the region in Spain you are buying in, but are typically 7% or 8% of the property price.

Notary and Registry Fees

Notary fees are made up of a fixed element and a variable element that corresponds to the price of the property and the number of clauses in the deeds. If you use a mortgage there will be notary fees to pay on the mortgage deeds as well.

There will also be a fee payable to the property registry to list your property (and mortgage) on the register. As with notary fees, this amount will depend on the price of the property and mortgage amount, if used.

In general, the combined notary and registry fees are roughly 1% of the property price.

Legal Fees

Lawyers typically charge 1% plus VAT of the property price for the conveyancing procedure, as recommended by the lawyers association in Spain. Before instructing a lawyer it is recommended that you find out what services are included in this price. These services should usually include listing your property in the registry, updating the cadastre (detailing the property) and filing and paying the relevant taxes.

Mortgage Costs

If you use a Spanish mortgage to buy your property this will increase the amount of taxes, notary fees and registry frees, according to the amount you wish to borrow. There will also often be an arrangement fee of 1% of the value of the mortgage.

Completion

Completion is effected when you sign the title deeds (escritura) in front of a public notary, and pay the vendor in full. After that you will receive the keys to your new property. There is then just the small matter of your lawyer registering the property on Spain’s property register and changing the utility bills, local rates (IBI) and rubbish collection into your name.

At the signing all parties (or their legal representatives if acting under a power of attorney) are present and the notary reads aloud the deeds and ensures everyone understands the terms of the sale. As buyers you will need to take a valid ID, such as a passport, and payment (your lawyer will usually arrange a cheque or banker’s draft in the amount for you). You will also need a foreigner’s identity number (NIE), which your lawyer will have pre-arranged at a police station.

If there is anything in this Buyer’s Guide that you are unsure of, or would like to discuss in more detail, please do not hesitate to contact us by phone or email and we will answer your queries in full.