The cost of buying a property in Spain

Is 2022 a year for you to take the big step and become a property owner? We have prepared the definitive list of the cost, expenses and taxes that must be paid when buying property in Spain

This information will help you have everything under control and avoid any surprises during the buying and selling process.

What taxes are paid when buying a flat?

The real estate tax system in Spain is in a state of constant evolution and change. For his reason, it is usual that on many occasions the current tax obligations corresponding to each type of operation are unknown.

For example, the entry into force of the new cadastral reference value has been one of the latest updates in the real estate market. This value has had an effect on the ITP tax base, one of the main taxes that defines the cost of buying a property

Do you want to know what are, today, the taxes that the buyer must pay at the time of purchase? Take note!

1_The Notary

This is one of the expenses regulated by the State. Notary fees for the services provided are between €600 and €875. The final price will depend on the value of the house.

2_The property registration

Registering the home in the Property Registry is another of the expenses associated with the sale. The deeds signed by the notary must be registered. A management that has an approximate cost of between €400 and €650. These fees are also regulated and their final amount will depend on the value of the property.

3_VAT y DLA

There are some taxes whose payment is mainly linked to the type of home purchased. On the one hand, taxes are associated with the purchase of new-build properties and, on the other hand, with second-hand homes.

This is the case of VAT and the tax on Documented Legal Acts. These are two taxes that the buyer has to pay only in the event that he acquires a new construction home.

• VAT: In Catalonia, it amounts to 10% of the sale value. The same applies to the Community of Madrid. For example, for the purchase of a €200,000 home, the VAT to be paid would be €20,000.

• DLA: its amount will also depend on the Autonomous Community. In Catalonia, it is set at 1.5% and in the Community of Madrid at 0.7%.

4_Property Transfer Tax

Likewise, there are taxes that are only linked to the cost of buying a second-hand property. This is the case of the ITP that taxes the sale of homes.

In Catalonia, the general rate is set at 10%, while in Madrid it is 6%.

There are cases in which this percentage may be reduced. Tax advantages that aim to encourage the purchase by the younger population. For example, in Catalonia the tax rate can be reduced by up to 5%:

• If the buyer is under 33 years old.
• If it is the first property that is purchased and its use will be destined to habitual residence.
• If the last rent does not exceed €30,000.

In Madrid, on the other hand, the reduction can drop to 4% for large families.

With Law 11/2021 on measures to prevent and fight against fraud, which was approved last July 2021, the calculation of the ITP tax base has been modified. It is no longer the real value of the home but now refers to the market value determined by the Cadastre.

Find out below what the new reference value of the Cadastre consists of

Así te afecta el nuevo valor de referencia del Catastro

5_Mortgage expenses

If the buyer intends to apply for a mortgage, they should know that there are also some associated expenses:

• Home appraisal: to apply for a mortgage it is essential to present an appraisal report to corroborate its value. In most cases, it can be the same financial institution that is in charge of carrying it out.

• Opening commission: It will depend on the financial institution. In many cases, it is not applied.

Since the entry into force of the new Mortgage Law, many expenses associated with the mortgage that previously had to be assumed by the buyer, have now become the responsibility of financial institutions. These are those expenses associated with the constitution of the mortgage loan: management, notary and Registry.

If you are searching for a home, whether in Barcelona or Madrid, we invite you to take a look at all the properties for sale that we currently have available at KM2 Servicios Inmobiliarios.

New-build and/or second-hand properties, among which you can find the home you’ve always wanted.

Check them out, here.

Do not hesitate to contact our real estate consultants to request more information or arrange a visit.