Any property or loan transaction requires the involvement of professionals who want to get paid for their services, and, of course, the tax office doesn’t want to miss out.
But if you know what you have to pay, you can include these costs into your budget and you won’t encounter unpleasant surprises.
The purchase of your home is a public contract, and the following costs are involved in its formalisation:
The Value Added Tax (IVA) plus the Transfer Tax (AJD, Actos Jurídicos Documentados) for new buildings. The current standard VAT (IVA) rate is 7% on the sales value in case of private use and 16% in case of commercial use. The standard Transfer Tax (AJD) rate is 0.5% on the deed amount but there are regional differences.
The Capital Transfer Tax (ITP, Impuesto de Transmisiones Patrimoniales) for “second hand” properties. The standard rate is 7%, independent of the assigned use of the property, but there are again regional differences.
The fees for Notary (Notario), Land Register (Registro de Propiedad) and Solicitor (Gestoría)
Loan Arrangement Costs
All mortgages imply a series of expenditures that should be considered when deciding to take out a mortgage. These expenditures are:
The valuation (Tasación). Whether you need a mortgage or not, when deciding on the purchase of real estate you should consider if the property you want to buy is really worth the price the seller is asking for it. The best way to check this is to ask an expert to appraise the real estate in question. That is the valuation. Moreover, if you need financing, as the maximum amount of the loan depends on the value of the property, your mortgage provider needs the valuation to determine it.
The Certification of non-encumbrance (Nota simple de cargas), issued by the Land Register, makes sure that your property is not affected by a former mortgage or other encumbrances.
The fees for Notary, Land Register and Solicitor
As well as the real estate purchase, the mortgage is a public contract. The Transfer Tax (AJD)has to be paid for every transaction that requires a public certification. In this case it varies between 0.5% and 1.5% on the mortgage amount.
Finally, you have to add compulsory fire insurance.
Of course, this should only be used as an approximate guide.