Expenses for the Real Estate Purchase in Spain

The budget of extra costs relating to the purchase of real estate in Spain, according to our experts, is 10-12% of the value of the property. When applying for a mortgage, this amount will increase.

Costs related to the deal of the real estate purchase

Notarial Services.
Regardless of the property you choose, the contract of purchase should be notarized. Notary fees are charged at the rates set by the state and will range from 600 up to 2000 euros or even more if it is a question of the exclusive properties worth from 1 million euros and above.

Property Register.
After notarization of the contract of purchase, you should enter it to the Property Register and make a record of the change of ownership. The remuneration of the Register is regulated by the state and directly depends on the value of the property, usually it is 400-650 euros and above if the cadastral value of the purchased property is high.

VAT or Property Transfer Tax (PTT).
The main tax, and accordingly the main cost item for the buyer when purchasing a new property is VAT (IVA) and when buying the real estate on the secondary market, the main tax is PTT (Property Transfer Tax). In Spain, starting 2019, their rate coincides and amounts to 10% of the declared value of the property. In case of a transaction on the purchase of a land plot or commercial property, the tax amount will be 21% of its declared value. However, the tax of 21% is refundable if the purchase is made on a legal entity.

Stamp Duty (IAJD).
In addition to VAT or PTT, another tax, named Stamp Duty Tax (IAJD), should be paid. The rate of IAJD depends on property location region and varies from 0 up to 1.5% of the value of the property. In Catalonia, its rate is 1.5%.

An Administrative Office (Hestoria).
Optional expenses can be considered the services of an administrative office to support your transaction:

• Registration in the Property Register
• Payment of all taxes and fees
• Legal support of the transaction
• The presence of a certified translator at the signing of the contract of purchase, etc.

These are private professional offices that do not have a single tariff for services. People usually resort to their assistance in case of buying a property through a mortgage. The cost of their services varies from 300 up to 2000 euros, when it comes to buying an apartment or a small house. Generally, if we are talking about expensive property, or commercial real estate, which will take more work for tax clearance, the cost of administrative office services starts from 2000 euros.

Additional Expenses

When the buyer acquires property through a mortgage, he has to consider additional occurred expenses:

A Property Valuation.
When the buyer applies for a mortgage, he should pay for the property valuation to a Company-Appraiser, empowered by lending bank. Normally the banks credit 50-70% of the appraised value of the object. Received valuation has a validity of 6 months as of date of relevant paper issuing. A property valuation cost varies between 250-2000 euros depending on a Company-Appraiser, kind of property and its purchase value. Starting June 2019 when the new Mortgage Law came into force, all other expenses occurred within a mortgage transaction are to be covered by the Bank, i.d.: notarial services, entry in the Property Register and Stamp Duty.

An Origination Fee.
This fee varies from 1.8 up to 3.6% of approved mortgage value as per agreement between the Mortgagor and the Bank. Normally this amount is deducted from the money transferred to the Client. Although there are many banks that do not charge this fee at all, replacing it with additional services: insurance policies, credit cards, etc. Particularly, one of these services may be a Mortgagor life-insurance for the amount comparable to the issued mortgage.

Real Estate Insurance.
Insurance of a purchased property is a mandatory condition for approval of a mortgage loan.

As we have mentioned above, starting June 2019 when the new Mortgage Law came into force, all other expenses occurred within a mortgage transaction are to be covered by the Bank, i.d.: notarial services, entry in the Property Register and Stamp Duty.
Lusa Realty  invites you to consult our experts with regard to costs and expenses optimization issues when buying a property or applies for a mortgage on favorable terms.