Everything comes at a price. Nothing is free. And the same goes when buying your perfect dream home in Spain. The Spanish taxman loves it when you find your new home in Spain, as this is how the Government makes a big chunk of their revenue, through property sales.
When budgeting to purchase your future home, you need to allow for costs and incidentals on top of the purchase price, to be able to walk away knowing that the house will be legally yours.
Purchasing a property here without a mortgage, you need to allow approximately 13% on top of the agreed price. Here’s a quick summary of how the cost is broken down.
1. Property transfer tax (Stamp Duty). When buying a resale property, the tax amount is 10% of the purchase price, i.e. Price of property €100,000 x 10% = €10,000.
2. Notary and Land Registry fees are a percentage of the purchase price. However allowing €1,000 on a purchase price of €100,000 will be enough to cover these two fees together. For those who are unfamiliar with Notarial services, these are Government appointed people that draw up the Title Deeds. They are independent, and don’t work for the buyer or seller.
3. Don’t try to cut corners to save money, on one of your biggest investments of your life. Use a local Lawyer to do the conveyancing. The cost should be less than €1,000, even if you are purchasing with a mortgage. If you choose to use a Lawyer out of Spain, they will charge you a lot more than this. They will do exactly the same job, but you will end up paying more than you should.
4. Paying for the property by Spanish Bankers Draft is the safest way to go. But they do come at a price. The banks charge a percentage of the amount on the cheque, but they are negotiable. One way they can be negotiated, is by taking out insurance with the bank too. This is an offer the banks like to make, but you must have your negotiating skills at the ready!
An example of allowing 13% on top of your purchase price would look like this:
Estimated Purchase Price: €100,000 x 13% = €13,000 Total: €113,000
Buying a property here is pretty straightforward, however you do need to allow for those extra costs. If you are purchasing with a mortgage, then allowing 15% on top of the price should be enough.