Before you visit Spain, it is a good idea for you to obtain clarity on available financial information and your possibilities. It is important to have good information about all financial issues that are involved in the purchase of a property abroad.
Estepona Living can introduce you to a network of carefully selected tax and insurance advisers, lawyers and banks. Based on our own and our clients passed experiences.
Estepona Living wants to provide you with some general important guidelines regarding the costs. Your lawyer or financial advisor will also be able to explain things in more detail.
Estepona Living geeft u hierbij enkele algemene richtlijnen m.b.t. extra kosten van onroerend goed. Uw advocaat of financieel adviseur zal dit alles nader kunnen toegelichten.
For more information on the specialists: Recommended Services
The purchase price of a property in Spain is generally not including certain costs and taxes. However, the real estate broker fee has already been included in the price, as this is paid by the seller.
As a guideline for purchase costs:
From January 2013 the Spanish government has increased the VAT (=IVA) on newly build properties (first owner) to 10%.
The ITP (transfer tax) on RESALE properties has also changed since 2012:
- Notary fees
Notary fees are variable and are established in an official scale. Costs can increase for example with a property that already has a mortgage. Additional documents will imply additional costs.
- Registration costs
These are the fees for the registration of the property in the official “Registro de la Propiedad” (property register).
These fees are approximately the same as the notary fees.
- Lawyers fees
Usually around 1-1.5% of the purchase price. Your lawyer will explain you all the procedures and costs.
Property purchase price up to 400.0000 Euro — 8% —
Property purchase price between 400.000,01 tot 700.000 Euro — 9% —
Property purchase price from 700.000,01 Euro and more — 10% —
Example property- Purchase price: 600.000 Euro:
First 400.000 Euro (8%) — EUR 32.000 —
Balance of 200.000 Euro (9%) — EUR 18.000 —
Total ITP to pay: — EUR 50.000 —
In the event of a purchase transfer, you will receive copies of all the payments of taxes that apply to the specific property. Examples of these are:
The annual municipal property tax – (IBI = Bienes Inmuebles impuesto sobre).
This is an annual tax and is charged in respect of the local rates and is payable to the Local Municipal Town Hall. I.B.I. is based on a percentage of the cadastral or rateable value (0.3-0.9%) of the land and is assigned by the Spanish Tax Office. An example of this for a 2 bed 2bath apartment based in Estepona would be approximately 500€ per year.
Local municipal taxes based on the catastral value –
The official cadastral value of the property, which serves as a basis for the calculation of taxes, is listed as the Valor Cadastral (also mentioned on the IBI bill).
Sewerage and rubbish collection (basura) taxes can be included in this amount, but can also be charged separately. Rubbish collection charges are determined by the local Town Hall and is dependant on the property.
This is an annual charge, an example of this for a 2 bed 2 bath apt in Estepona would be approximately 160.00€.
Energy and water cost –
Electricity is supplied by the local energy company, Endesa. Every property has a meter and this is normally read every 2 months. Payment is made via a bank standing order which will be set up by your lawyer when you purchase your property.
Water usage is determined by reading your water meter and this is normally carried out every 3 months. Water is not expensive in Spain and also paid via direct debit.
In many urbanizations (unlimited) water usage is included in your service costs.
Service (community) fees –
You pay a monthly service fee if you buy a house or apartment in an urbanization, normally charged on a quarterly basis. These fees cover all costs for maintenance of buildings, cleaning, security, administration, gardens, swimming pools, facilities etc. The amount payable will depend on size, facilities, staff etcera. You will pay more in an urbanization that has facilities such as gardens, pools, tennis, gymnasium.
An example of this could be a 2 bed 2 bath apartment situated in an urbanization with a pool and small gardens where they would pay 100.00€ to 200.00€ per month.
Painting of the external part of the building is normally included in the community fees and is carried out every 3 to 4 years.
The procedure for selling a property is in some ways similar to buying a property.
The first thing you have to decide upon is a selling price. Providing you have a good, trustworthy Real Estate broker to market your property, they will give you guidance on this.
Once you have decided on Net price (excluding your costs) setting a selling price is fairly easy. The selling price will include commission for the selling Real Estate broker and some room for negotiation by the buyer.
From the Net figure you receive it is normal that you will then have the following basic selling costs and Taxes deducted from this amount:
Retention – 3%
If the seller is a non-resident of Spain, the buyer must retain and pay 3% of the declared sale price to the tax authorities at the time of completion, on account of any taxes you may owe, in particular any Capital Gains Tax liability you may have. If, in fact, your Capital Gains Tax liability amounts to less than the 3% retention you can, following completion, complete and submit tax form 212 within 30 days and request a refund of the excess. The refund should be made within 90 days of submission of the completed form. If, on the other hand, your Capital Gains Tax liability amounts to more than 3%, you need to complete tax form 212 and submit this to the tax authorities with the extra payment within 30 days of the sale.
Capital gains tax – Standaardtarief 19%.
You are liable to pay Capital Gains Tax on your net profit. Various costs can be deducted before taxation, such as: IVA/ITP, notary fees, any home improvement/extension costs, selling costs.
As a resident of Spain you are exempt from paying Capital Gains Tax on your net profit if the property being sold is your only or main residence and you purchase another property for the same value or more within 2 years of the sale. If the property you purchase within 2 years of the sale is worth less than your net profit, the relief is apportioned accordingly.
Plus Valia tax –
This tax is set by the local authorities and based on the increase of the value of the land from the date the owner acquired the property to the time of the present sale. The local authorities determine the amount of plus valía to be paid for each house purchase in Spain, depending on the area where the property is located. The market value or sales price of the property does not have an effect on the plus valía tax. Normally, but not necessarily, the seller pays the plus valía tax. However, this will depend on the sales agreement.
- Legal Fees –
Your Lawyer will charge fees for processing the sale of your property. These fees are normally set at 1% of the sales price.