Costs
Selling costs
Witholding Tax (only for Non-Residents)
This tax only applies to non-resident sellers. The seller is obliged to agree a 3% retention from the sale price and pay it to the Spanish Treasury on account of potential tax liability. The seller or the legal representative should be able to claim this amount back by submitting a form to the Spanish Tax Office.
In order to be able to get a refund of the non-resident tax the seller must be up to date with all the payments.
Plusvalía Tax
This is a municipal tax payable to the Townhall. It is calculated on the basis of the increase in value of the land on which the property is located, as well as the percentage of mutual share and the years that have passed since the last conveyance.
Lawyers’ fees
In general, these come to 1% of the sale price, plus the current VAT. The lawyer’s professional fees are an expense that can be deducted when the Capital Gains Tax is calculated.
Estate agents’ fees
These are usually 5% of the sale price, plus the current VAT. The estate agent’s commission is paid when the sale is completed. This cost can also be deducted when calculating the Capital Gains Tax.
Capital Gains Tax
The profit obtained through the sale of a property is classified as taxable income. The actual rate is 19% for residents in any of the countries of the European Union, Norway and Iceland. For residents in other countries which are not located within the EU the rate is 24%. [what should we say about UK here?]
Energy performance certificate
Due to the European directives on energy and environmental issues, when owners sell their property they must provide the buyers with the property’s energy certificate, which must be prepared by a qualified technician.
Buying Costs
Buying your home on the “Costa del Sol”
If you have decided to buy a property on the Costa del Sol this post is of interest to you. Below you can find some information on the buying process and the estimated costs for buying a property in this region.
Once you have found your dream property this is the procedure to follow:
Once the sale price has been agreed you will need to pay a reservation deposit (normally between €6.000 and €10.000 depending on the property type) in order to ensure that the property is being reserved and taken off the market. Your lawyer should normally hold this deposit on your behalf for 2 weeks.
Once the deposit has been paid your lawyer will proceed with the legal searches on the property to ensure that all the documents are in order. It is also recommended at this stage to instruct a surveyor to survey the property for you.
Once this has been done you will then need to pay a 10% (deposit included in this amount) and sign the Private Purchase Contract and to agree a final completion date.
Cash buyers (not requiring a mortgage in Spain)
The Notary: These fees are regulated by the government and they are usually between 500€ and 1000€. The buyer can choose the notary.
The registration of the property: The cost of the inscription of the property in the registry usually varies between 100€ and 500€.
The ITP or VAT: Depending on the type of property you are buying you will pay either an 8% or a 10%
If you are buying a newly built property, you will have to pay VAT on that property which is a is fixed rate of 10% .
If you are buying a resale property, you will have to pay the ITP, which is between 8% and 10% depending on the house price. There is also a reduced rate of 3.5% for those residents under 35 years old buying their main residence for a price equal or lower than €130,000.
Mortgage required
Due to the New Mortgage Law of June 2019, the expenses that the buyer must pay when purchasing have now been reduced to the following:
Bank valuation (only necessary if you apply for a mortgage) This is usually between 200€ and 600€.
Copies of the deed: They are around 20€, a very small cost compared to the costs previously assumed by the buyer (stamp duty, notary, and mortgage registration as well).
We strongly recommend that you use a qualified Lawyer to represent you in the buying process, if you do not have one, we can recommend one.