Though not strictly transaction costs like fees and taxes, there are other costs to bear in mind when buying a home in Spain. After all, they all come out of the same pocket — namely yours. Once you have got the funds in place, you will need to pay the vendor on the day you complete the purchase. It all depends on the deal you have with your bank. Make sure you clarify this with your bank before you ask for the cheque.
Once you own a property you will need to furnish it. The cost of furnishing a property depends entirely upon what you want. However as a very general rule of thumb a 2 bedroom apartment will cost around 10, to 15, Euros to furnish nicely if you buy everything new. Of course there is no limit to how much you can spend, though you can also get away with less than 10, if you are on a tight budget all from IKEA, for example. This is normally paid by the vendor, but it can become a problem for the buyer if the vendor fails to pay it.
Buyers have to be particularly careful with this tax when the vendor does not live in Spain. See the section below on costs to bear in mind when selling property in Spain for more information. Find out more about building surveys in Spain. There will of course be costs associated with owning a property in Spain. Some of these will be maintenance costs, such as cleaning, repairing, reforming, utility bills, rubbish collection, and so on.
These will be determined by the size and type of the property you buy. Obviously a large villa with a garden and pool will require much more effort and cost to maintain than a small apartment. For cleaning a figure of 10 Euros an hour is fairly typical throughout Spain. Apart from the general maintenance costs referred to above, there are a number of costs in the form of taxes and fees that property owners in Spain face. A local tax on the ownership of property in Spain, irrespective of whether the owner is a resident or not.
Calculated on the basis of the valor catastral an administrative value that is usually lower than the market value, sometimes considerably so set by the town hall the tax rate goes from 0. This tax has been changed several times in recent years. For the latest situation see Spanish Wealth Tax Patrimonio. Not rented out Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property.
Rented out If non-residents rent out their property and receive an income in exchange, they are obliged by law to declare this income and pay taxes on it. The tax rate depends on the level of income. Owners of property that is part of any development, building, or complex in which common zones are shared with other owners are by law obliged to be members of the community of owners, known as the Comunidad de Propietarios.
This will entail paying community fees for the upkeep of the common areas, and any other services that the community vote for. The fees will vary according to the magnitude of the common areas, the costs of maintaining them, and the services that the community vote for. A budget for annual community expenses is approved by majority vote of all owners or representatives who are present at the annual general meeting of the Comunidad de Propietarios.
Household insurance will vary according to the circumstances of the owner and the type of property. However it should be born in mind as a cost that all property owners will face. It is calculated on the basis of the valor catastral an administrative value that is usually lower than the market value, sometimes considerably so of the property.
The amount to be paid will depend on how long the seller has owned the property: the longer the period of time during which the seller has owned the property, the higher the amount of tax. Be warned that if the vendor fails to pay it, the buyer then becomes liable for the unpaid tax, with interest!
That means the new owners starts accumulating unpaid IBI tax bills without notification , plus penalties and interest, all without knowing it. When the vendor is a non-resident, the law states the buyer is liable for this tax, even if the parties have agreed that the vendor will pay.
The safest way to play this, from a buyer point of view, is to agree to pay this tax using funds deducted from the agreed sale price. This is particularly relevant when buying from a vendor who does not live in Spain non-resident. When buying property in Spain, always keep digital and hard copies of all invoices related to your purchase. Likewise, if you ever do building work on the property once you own it, keep copies of all licences and invoices. You may be able to offset these expenses against capital gains when you sell, and so reduce your Spanish capital gains tax on property sales.
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Skip to content. Leave a Reply Cancel Reply You must be logged in to post a comment. This is partially due to the popularity of short-term holiday lets. Now, some authorities in Spain are already seeking to curb this trend, with Madrid set to bring in new rules in to regulate the holiday let sector.
In fact, Spain encourages investment by foreigners, both resident and non-resident. You will require a financial number which can acquire by visiting a police station with your passport. This typically happens on the day for Spanish or EU citizens but may take a few weeks for others.
This is not a work permit, but it will allow you to live in the country. As it is easy for foreigners to buy property in Spain, there are websites and estate agents catering to almost every language and nationality. Many British real estate websites also list Spanish properties, with some online portals listing thousands of options. However, these mostly focus on holiday homes, so you may prefer to use a Spanish site, such as the ones listed below.
Estate agents provide a wealth of information about the region, are bilingual, and often deal with overseas buyers. However, regulation is relatively low and unscrupulous estate agents do exist, so be wary of anyone who asks for payments upfront or suggests cutting corners.
Always remember that you can choose your own notary, mortgage provider and so forth — you do not need to use a service suggested by the estate agent. On occasion, the large numbers of inexperienced foreign buyers have provided an opportunity for unscrupulous developers and estate agents to sell properties that are not legitimate. In some cases, planning permission has not been acquired before building, and properties are eventually torn down by the local government.
In others, the quality of the property has not been up to scratch or as indicated, resulting in costly repairs. The British Foreign Office has issued notices warning expat buyers to be cautious and not take unnecessary risks. They recommend, at minimum checking:. Most of this information can be provided by the land registry and accessed by making a request by email, phone, fax or in person. You can find the appropriate land registry office by vising the national website: www. While malicious intent is rare, caution is advisable when buying a property which does not yet exist.
At minimum you should:. As a non-resident, you may also buy land and have a property built yourself. In this case, good legal advice is even more important as you will need to ensure that contracts with builders are appropriate and watertight. In Spain, any mortgage or debt tied to a property is transferred to the new owner when the property is sold. Debts may include:.
The process of buying a property in Spain usually runs as follows. The buyer then arranges any mortgage they require, although they should have already discussed their needs with the mortgage provider. The contract of sale escritura de compravento is usually signed in front of a notary, at which point the full sale price, taxes and other costs become due. The services of a notary are not legally necessary to complete the sale. But it is advisable and required by many mortgages.
The seller is responsible for hidden defects in the property, even if they are not aware of them. However, in practice gaining restitution for such defects can be difficult and costly.
Paying the costs and taxes associated with buying a home can be completed by the buyer or their agent. The buyer is also responsible for registering the property. Following the crash, Spanish banks were reformed with significant IMF involvement. This reduced the number of lenders in operation, and significantly increased the regulation and oversight of the industry.
As a result, many banks began to lend less and mortgage rates and terms became less favourable. Mortgage lenders will not complete on a mortgage agreement until you own a property. The buyer usually pays the fees. They vary from region to region. Many are negotiable — there are no fixed fees for lawyers or estate agents.
Costs paid by the buyer include:. This is typically their only cost. Capital gains tax is paid on the profit of selling your home, i. You may be able to claim a reduction on the capital gains tax to account for inflation; or if you are purchasing another property in Spain; or if you are over 65 and have lived in the property as your main residence for more than three years. Your residential status does not affect the application of capital gains tax either, as capital gains tax should be paid in Spain for property owned in Spain even if you are no longer a resident.
Any lawyer practising in Spain should be registered with the local bar association Colegio de Abogados. They will have a registration number that you can ask for and then verify with the bar association. Naturally, registration does not guarantee honesty or competence, but it is a good minimum standard to insist on.
Many governments provide lists of lawyers and translators who speak both Spanish and another language.