When you start house-hunting in Spain, you probably have a fixed budget in mind, and look for properties that are listed for that amount. Careful! You must know that on top of the price you agree to pay the seller, there are a number of other expenses you will have to face, no matter what. The amount of these expenses will vary according to the purchase price and be different in each Autonomous Community.
There are also some ongoing costs associated to owning property in Spain, which you will have to pay on a recurring (monthly or yearly) basis.
In this article we’d like to give you a quick overview of what these costs are, so they don’t come as a surprise.
Costs associated to any real estate transaction usually paid by the buyer
- ITP/AJD tax (property transmission tax and document duties). Only if buying pre-owned property. It’s a percentage of the purchase price, and ranges from region to region. In Madrid the general ITP rate is 6%, while in Catalonia it’s a 10%. A reduction of this percentage may apply, depending on the age of the buyer, sale price, or other factors.
- IVA (value-added tax) Only applicable if buying new-builds. If you buy a new build, you do not pay the ITP tax, but instead pay IVA. The general rate is 10%, but again reductions may apply.
- Notary fees (variable).
- Registry fees (variable as well).
- Official appraisal fees (in Spanish called “tasación”). Only applies if you are getting a mortgage to finance your purchase. The bank will always request an official appraisal.
Costs associated to any real estate transaction usually paid by the seller
- IIVTNU tax (commonly called “plusvalía municipal), it’s amount that varies depending on the cadastral value of the land and the time that has passed between purchase and sale.
- Real estate agency commission. Only applicable if the seller used a realtor to help with the sale. Their rates generally go from 3% to 6% of the selling price.
Maintenance / yearly expenses
when owning property in Spain
- Utilities (gas, electricity, water, etc). The exception is if you rent the property out long term, for in that case the tenant usually pays for utilities.
- Community expenses (aka. homeowners association fees or in Spanish “gastos de comunidad”). Usually charged monthly or quarterly, they vary wildly from building to building depending on whether the building needs a lot of repairs or not, whether there’s a pool, a doorman, etc.
- IBI tax (impuesto sobre bienes inmuebles, or property ownership tax). It’s a yearly municipal tax. It is a % of the cadastral value of the property, so it is variable.
- Home insurance. It is not actually compulsory to have a home insurance, but it’s highly recommended. If you take out a mortgage, your bank will most likely make it a requirement.
- IRNR tax (non-resident income tax). Only if you are a non resident, in other words you do not live in Spain. The IRNR is the non-resident version of the regular income tax (IRPF) people living and working in Spain pay on a yearly basis.
- The tax base will be the gross rental income if your property is rented out (expenses cannot be deducted), OR something called the “renta imputada” (imputed income), which is a 1,1% for EU citizens or 2% for non-EU citizens of the cadastral value of your property.
- The tax rate is 19% for EU citizens or 24% for non-EU Citizens.
As you can see, there are a number of expenses you have to count on when you are planning to buy property in Spain. These amounts can increase your total investment by anything between 6% and 12%, so of course it is important to know how much they will be and make sure you put aside the right amount.
The good news is that when you hire a real estate personal shopper, we will help to calculate all these numbers based on your specific situation and your chosen property. Rest easy: with a personal property shopper, there will be no nasty surprises!
Written by Agnes Csomos, personal property shopper in Madrid with Property Buyers by Somrie.