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When purchasing a home, you must consider not only the price you must pay the seller, but also all the fees and taxes associated with the transaction. This way, you’ll be fully aware of everything you’ll need to pay and avoid unexpected surprises that could cause financial problems for the buyer.
Taxes to be paid for the purchase of a home
The taxes payable when purchasing a house or apartment depend primarily on the type of property and its location.
If you purchase a new home, the main tax you must pay is VAT, which is 10% of the registered value of the property. There are some exceptions to this percentage, such as if the property is located in the Canary Islands, where the Canary Islands General Indirect is applied, which is 6.5%, or if it is public housing, where the applicable VAT is usually 4%. VAT varies depending on the Autonomous Community and the type of social housing.
In addition to VAT, a second tax must be added to the purchase, the Stamp Duty, which is also paid by the buyer and depends on each Autonomous Community.
When purchasing a second-hand home, the main tax is the Property Transfer Tax. In this case, the amount depends on the percentage applied to the registered price and the Autonomous Community in which the property is located, although as a general rule, the percentage applied is between 6% and 10%.
Although these are the general rules, for VPO, large families, people with disabilities and young people or homes located in rural areas there are usually lower rates.
Expenses for the purchase of a home
For the purchase transaction, there are also associated costs that must be paid.
Notary fees
It is paid for both the purchase of a new home and for used ones.
Notary fees are regulated by the State, and they all charge the same amount for each service.
Notary fees payable are between 0.2% and 0.5% of the value of the property acquired.
For the execution of the public deed of sale, prices range from 600 to 875 euros, depending on the price of the property.
Register the property in the Property Registry
It is the next step after signing the deeds before a notary.
Prices are also set by regulations and vary depending on the property.
Registration fees range from 0.1% to 0.25% of the property price and are typically between 400 and 650 euros.
The management fees
This expense is optional since it is not mandatory to have an agency to purchase a home.
These companies are usually hired for the settlement of taxes and other procedures.
There are no regulated rates because they are independent professionals, although on average their cost is usually 300 euros.
Appraisal costs on the mortgage
To obtain a mortgage, you must hire an appraisal company to determine the value of the house or apartment you intend to purchase. After this, the bank will determine the financing percentage it can provide. Typically, the financial institution will lend 80% of the purchase or appraisal price, although in some cases it can reach 90% or even 100%.
The average price for a property appraisal ranges from €250 to €600, depending on the company, the property, and its valuation.
The mortgage opening fee
This fee will depend on the terms offered by the bank and can reach up to 2% of the loaned capital. This amount is deducted directly from the money given to the mortgage holder, although many banks do not charge it.
In order to charge the fee, the entity must provide notice so that it is not considered an abusive practice. Furthermore, it will be illegal if it is not commensurate with the services provided or its expenses, which must be justified.
Real estate fees
Some real estate agencies offer a service whereby they search for their clients’ homes and charge for it.
This expense, of course, is not mandatory and you can search for housing yourself.
The percentage charged will depend on what the agency in question offers. As we’ve seen, in addition to the sale price of the home, you must consider taxes and expenses related to the purchase. Among the taxes, VAT and property transfer tax stand out, depending on whether the home is new or secondhand. Regarding expenses, the most common are notary fees, registry fees, administrative fees, and property appraisal fees.
Further information
This article is part of our service Real Estate Lawyer in Spain. Visit this section where you will find all the useful information on this topic, including a complete guide on How to buy a house in Spain.
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