Purchase finances

In Spain there are substantial additional costs when buying a property which you will need to know about to budget accurately or work out what a property you have found will cost in total. The following costs are over and above the agreed purchase price:

Property purchase tax

This is paid to the Xunta de Galicia (Galician regional government) at the Registro office when you take the notarised sale documents there to have the property re-registered in your name.
It is normally 10%, although discounted rates of 8% for purchase of a primary residence if your total net assets are below a set level and 4% for purchase of a primary residence if you are under 36 years old and your net assets are below a set level are currently available.

This tax is calculated on whichever is the higher of the purchase price or the Xunta’s official valuation of the property.

Notary fees

The purchaser is responsible for paying the notary fees for the sale/purchase. These are typically 600-700€ and vary depending on the complexity of the sale/purchase contract.

Registry registration fee

This is payable to the Registro office when you collect the title deeds (escritura) in your name for the property and is typically around 250€.

Lawyer or gestor costs

Documentation relating to the property should be thoroughly checked (as detailed in our purchase process section) by a Spanish property professional/gestor or a lawyer.

Using a lawyer for this will typically cost about 1% of the purchase price with a minimum cost of around 1200€.
The alternative of getting a trusted real estate agent to do these checks for you costs much (eg 50-70%) less and is often faster and possibly even more thorough. If pursuing this route, in the small percentage of cases where something out of the ordinary turns up you can get specific advice about just that from a lawyer.

Costs related to a mortgage

If you are taking out a mortgage to buy the property you can expect to have to pay around 300-400€ for a bank valuation of the property and probably also a mortgage account “startup” fee of some 600-1000€, although this depends on the terms and conditions of your mortgage. Mortgages are front loaded in this way because of fairly recent legislation making the maximum permissible charge for closing a mortgage account early 0.5% of the outstanding total – this gives banks less security against people switching mortgage providers because customers are no longer locked in with high exit fees, and thus they put all their costs at the start of the mortgage.

As a mortgage makes the purchase contract more complex, having a mortgage will also typically add around 100-200€ to the notary fees.

In Spain new mortgages are taxed, at 1.5% of the value of the mortgage, payable when the mortgage is started.

Note that in the UK mortgage fees are normally added to the mortgage total, and so amortised over the period of the mortgage. Not so in Spain, all of these costs need to be paid upfront and in full.

Liabilities that can come with a property

The notary should not allow the purchase to go through without your being aware and accepting of any liabilities that may come with the house, so you should always be informed of anything of this nature before completing the purchase.

The principal liabilities that a property’s new owner can inherit (by law) and that you should watch out for are:

  • If you purchase the property from owners who are not (officially, fiscally) resident in Spain then 3% of the purchase price must be paid to the Spanish tax agency as a withholding tax to cover their potential capital gains tax liabilities. The notary will enforce this during the sale/purchase. (This is not 3% extra, just a withholding from the purchase price …but you’ll need separate banker’s cheques for it).
  • If the municipal taxes are in arrears up to 5 years of back taxes can be claimed by the local council from the new owners of the property. It is normal to be given a copy of the receipt for the current year’s municipal tax at an early stage of the purchase, and the notary will also specifically check that this receipt is present and shows all taxes are paid.
  • Occasionally you will find that a property was restored with the aid of a grant from the Xunta de Galicia or some other organisation to enable it to be used for rural tourism or similar. These grants often contain a clause that the property must continue to be registered and used for that purpose for 15 years after the issuance of the grant, and that if they aren’t the grant must be repaid. Such clauses should show up on the nota simple from the Registro office.
  • The majority of rural and also quite a high proportion of older urban properties in Galicia have some part of the property (normally an outbuilding or an attic) which has been built, renovated or the use changed (eg. from garage to living accommodation) without this having been officially validated in the three places it has to be (the Catastro, the Registro and the local council’s records for the municipal IBI tax). Since this is the norm rather than the exception most people tend not to make an issue of this and just purchase the property as is. If, however, you are keen to fully legitimise a property then you can expect to pay the following to do so:
    • Architect’s or architectural technician’s project done retrospectively to match what already exists (typically 500€-3000€ depending on what it needs to cover) submitted to the local council and the 4% property improvement tax paid on the estimated value of the works.
    • Notary fees and Registro fees (eg. 500€ in total) to update the property register with the new details.
    • Since municipal taxes are based on the Catastral value of the house and its square meterage, and both of these will increase if undeclared expansion of the building is legitimised, 5 years times the increase in municipal tax liability will need to be paid as back tax.
In summary

As a rule of thumb, adding 12% to the purchase price of a property will give you a reasonably accurate idea of the total cost of a typical purchase.

And then, of course, you need to factor in what any renovation or changes you want to make to the property will cost to get a final total. Our restoration and build finances section can help you understand what this cost is likely to be.