Buying a property in Spain is a straight forward process and in many ways similar to buying a property in the Uk and other European Countries but there are some key differences. Here at Paul Matthew Homes we will guide you through the whole journey. So let’s walk you through these guidelines so you know what to expect.
Know how much you can spend:
Get your finances in order and investigate a mortgage if it is needed. You will need to do this in advance so that you can move quickly when we find the property you want.
Budget for taxes and fees that will increase the listed price by around 13 %.
You are strongly advised to hire a lawyer to help you during the buying process. Your lawyer drafts and reviews contracts on your behalf and can explain all the legal and administrative issues you face. Your lawyer should also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).
A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many charge around 1% of the purchase price in legal fees.
If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This cost is around 500 Euros. Then there will be the costs of the mortgage itself. This varies according to the provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Finally a mortgage will increase the Notary expenses.
Notary expenses are nearly always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate Notary fees as being 1% of the purchase price declared in the deeds of sale. In many cases however Notary fees are more like 0.5% (or less) of the price declared in the deeds.
Property Registry Inscription Fees
Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate 1% of the purchase price declared in the deeds, though once again it depends upon the property and the area, and the fee could be considerably lower.
To pay for the property, you will more than likely need to write a banker’s cheque. In order to do that, you will need to open an account in a Spanish bank and transfer money from the bank in your country. The cost of transferring the money can go up to 0,4% of the amount transferred. The banker’s cheque will most likely cost 0,5% of its amount.
Taxes to Pay
IVA (Spain’s equivalent of VAT) – This tax is 10% for residential properties that have never before been occupied, plus stamp duty at 1.5% in Valencia.
ITP (Impuesto sovre Transmisiones Patrimoniales) – This transfer tax is due on re-sale property. It is 10%, depending on the region where you are buying and the price.
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