Spain: Guide to Buying Costs and Procedures

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Total transaction costs are moderate in Spain

How high are realtors’ and lawyers’ fees in Spain? What about other property purchase costs?

How difficult is the property purchase process in Spain?

You are then requested to pay a 10% of the purchase price as deposit. The estate agent will hold these funds in a bonded client account. As a precaution, it would be wise to put your deposit into an escrow account, a blocked account where neither party can get at them until the sale is closed.

If you intend to raise finance for the purchase, make sure that the sales agreement has an arres agreement (i.e. a 10% deposit) and a date specified for completion. However, it is possible to sign the contract without such a deposit and while technically you have the right to sue a seller who subsequently withdraws, with an arres agreement in place you are entitled to twice your deposit as compensation in the event that the seller decides to withdraw.

You pay the balance of the purchase price and all fees when you and the seller have signed the Escritura de compraventa, the definitive contract equivalent to the Deeds of the property. If you are buying a new property, you do not own the property until the work is completed, and you are in receipt of relevant certificates.

In Spain, the notary is a public official and is required to witness the deed of sale. But getting expert, independent legal advice in addition to the notary is recommended to protect your own interests. The notary prepares the official contracts and makes sure they comply with Spanish regulations. The notary enters the sale on the local property registers (Registrio de las Propriedad) to protect against third party claims. If there is common ownership, a Community of Owners must be established through which community charges can be shared. If your property is in an apartment block then the situation relating to the Horizontal Division should be clear, especially in new developments.

The cost to register the property is around 7.1% of the property value. The transaction is normally completed in about 20 days with 4 procedures.

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Property Transfer Tax:
House buyers of re-sale property (as opposed to brand new) are required to pay the Property Transfer Tax (Impuesto de Transferencia de Propiedad), 6% to 7%, depending on the autonomous region. 7% in Madrid.

The ITP is paid at the relevant tax office. In cities where there are no specific tax office, payment is done at the Registry during the registration process. In Madrid and Andalucia, payment can be done online.

or Value Added Tax (VAT):
Buyers of new houses must pay 7% VAT (Impuesto sobre el Valor Anadido or IVT), plus an extra 0.5% to 1.0% stamp duty (depending on the autonomous region). Vacant land, commercial premises and parking spaces in garages are considered luxury items, VAT for these items is 16%. It is therefore advisable to buy land with a house finished or under construction to minimize taxes.

Notary and Registry Fees:
Notary and land registry fees are fixed by law and based on a sliding scale. These are approximately 0.5% - 2%, depending on the value.

Registration fees are capped at €1,900. Discounts of 25% for housing purchases are available. Low-income housing (80 m2 per home) has fixed fee of €36 per entry and €100 per notarial deed.

Title Deed Tax:
Title deed tax, 0.5% of the declared value of the property, is charged for the transfer of property title.

Legal Fees:
Legal fees are generally negotiable. Lawyers can charge a fixed fee per hour (€100 - €250) or a percentage of the purchase price (1% to 1.5%), for their services. VAT of 16% is imposed on legal fees.

Agent's Commission:
It is quite common in Spain to do private house sale because of the exorbitant fees charged by real estate agents, until quite recently. Real estate agent's commission is now around 2.5% to 3%.

Spain - more data and information

• How landlord-friendly is the law in Spain?

Your Comments

posted by James Barr | 2007-07-24

Property Restorer/Tourism, Medina Sidonia, Andalucia

posted by Charles Fitzhugh | 2007-08-18

Retired, Alicante Spain

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