Additional House Buying Costs in Spain
It is normal to allow 10% of the property value declared in the escritura for the additional buying costs which covers three taxes, two fees and charges from an abogado.
Transfer Tax or IVA (Value Added Tax) 7%
Actos Juridicos Documentados ( new property only) 1.0%
Plus Valia tax 0.5%
Notary fees 0.5%
Property registry fees 0.5%
Charges from an abogado 1.0%
Transfer Tax and IVA
Impuesto de Transmisiones Patrimoniales is the Spanish for Transfer Tax which is charged on a sale between two individuals. IVA, the Spanish equivalent of Value Added Tax, is a business charge on a sale between, say, a property company and an individual. Governments can vary taxes, and they do, but it is normal to allow 7% for either of these two taxes.
Actos Juridicos Documentados
Effectively stamp duty of 1% payable on a new property. It is not payable on a resale property.
Plus Valia tax
Plus Valia is payable on a resale property and a new property. It is assessed locally on an increase in the value of the land since the previous owner bought the property or a developer bought the land. An apartment on an urbanisation where little land is involved or where there has been no increase in value in a short time will result in a low plus valia tax charge. Conversely a home with a large plot of land, held by the previous owner for say 30 years, will suffer a high charge.
Of course it is the seller who should pay this tax. They have gained the benefit of the increase in land value. The law of the country supports this view. In practice however this tax has often fallen on the purchaser since it a more secure method of collection. After all, a vendor may flee the country leaving this tax unpaid.
A purchaser may feel, quite rightly, aggrieved at paying this tax. Recourse is simply to have a clause inserted in the contract stating it is the vendor who pays the Plus Valia tax and withholding this sum from the final payment.
Notary Fees
These vary according to the value of the property declared in the escritura and the number of pages in the document. Allow 350 Euros or 0.5%.
Property Registry
Again there is a fee to have the property registered. It is wise to allow 0.5%.
Charges from the Abogado
Naturally this fee will depend on the amount of work done. If the basic paperwork has been handled to a straightforward conclusion then the charge will be low. If on the other hand there have been complications or the need to draw up multilingual contracts then the charges will be higher. Allow 1 % for this charge.
