Taxes when buying a property
Although there are special cases, the most general transaction is the purchase of a residence (apartments, villas or townhouse), new or second hand, the buyer will be paying some fees that are as following...
1.– VAT and Stamp Duty
This tax applies only to newly built properties sold for the first time by a developer. The VAT rate for residential properties is 10% of the purchase price. On top of that, an additional 1,5% of the deed’s price has to be added as Stamp Duty.
2.– Transfer Tax
This tax applies to transactions deemed to be second or ulterior transfers. Therefore, when buying a property depending on being new or second hand, the applicable is the VAT and Stamp Duty or the Transfer Tax (Stamp Duty is already included in this tax). The rates are different for each autonomous region. In our area, they have been fixed by the Junta de Andalucia as follows:
- 8% for transactions below 400.000 euros.
- 9% for amounts on top of 400.000 euros but less than 700.000 euros.
- 10% for the amounts exceeding 700.000 euros.
3.– Notary and Land Registry Fees
Notary costs depends on the complexity of the deed and the purchase price. It can be estimated to be between 0,5% to 1%.
Land registry Fees may be estimated as 2/3 of the Notary cost.
4.– Lawyer’s Fees
It is highly recommended, if you are a foreigner or you are not familiar with purchase process, to hire a lawyer to guide you during the process. Lawyer’s Fees are, in general, 1% of the purchase price but it can vary depending on the complexity of the purchase.
These costs do not include the costs associated to the purchase with a mortgage. In general, the costs of that mortgage will include the bank expenses, the valuation cost, management fees, Notary and Land Registry Fees for the mortgage deed. If that is the case, the bank should be able to detail all of them.