What are the costs of purchasing a home? (Part 1)

Many clients do ask me about the cost of construction  and being an architect it is a forthcoming question, nonetheless every now and again I do get ask for other costs associated to the actual purchase of a house, in which case I have to do a little research to find out.

 

I have recently refresh my mind by visiting a very informative webpage at the “Idealista” portal where they sell an extremely large amount of dwellings mostly to Spaniards and I have found this very clear information which I would like to share with you.

 

The expenses of a home purchase.

• Public notary

• Registration with the Property Registry

• Taxes

• Gestoría (if we request mortgage)

• Document duties

The law defines what expenses are payable by the buyer (almost everything) and by the seller (only the municipal tax and the original of the deed). Normally there is little scope for negotiation, although it is true that any type of sharing of expenses can be agreed upon, including that all of them are paid by the buying party provided that it is done through a completely legal clause

When the seller is a real estate developer, the law obliges him to pay the municipal tax and the expenses of the declaration of new work and horizontal division. You must also pay the cancellation of the mortgage that may exists on the housing as long as you do not subrogate in it. The expenses in detail are:

 

1. Notary

Notary expenses are those incurred by the granting of the public deed of sale. Notary's costs are set by regulations and their amount depends on the amount of the property, although it can be increased by aspects of the notarial operation: number of copies, extension of the actual deed, if there is a mortgage involved, etc.

The notaries apply a fixed tariff that established the government in 1989 reason why all the notaries of Spain charge approximately the same fees. They can only give you a discount of 10%, so the competition between them is not much. The costs (or tariffs) in force for notaries are listed in the table below for private housing. It should be noted that in official public housing a reduction in tariffs is applied.

Please use these amounts as indicative. Do ask in your local notary for an exact quote.

Purchase amount     Notary

25,000€                     600€

50,000 €                    625€

100,000€                   675€

150,000€                   710€

200,000€                   750€

250,000€                   790€

300,000€                   830€

400,000€                   850€

 

975,000€                   875€

 

2. Property Registrar

They are the fees generated by inscribing the purchase-sale in the Property Registry. They are also set by regulations and their amount depends on the price of the property

There are variations that modify the general rules. For example, there are changes for public housing of, agricultural buildings, or for farms.

Purchase amount     Notary

25,000€                     395€

50,000 €                    420€

100,000€                   445€

150,000€                   470€

200,000€                   510€

250,000€                   550€

300,000€                   590€

400,000€                   630€

975,000€                   650€

 

3. Taxes

In this section we have to differentiate two large groups according to the type of dwelling

• Taxes for buying a new home

• Taxes for the purchase of second-hand housing

A) Taxes on the purchase of new housing:

• VAT (value added tax): when the house is handed over from the property developer for the first time, it pays VAT (currently at 10%). "First delivery" means those that are acquired from the developer after its construction.

If the homes have been rented after the completion of the works and are bought by the people who have lived there is also considered "first delivery", which would pay the VAT. On the other hand, if the buyers are different from the tenants they do not have this consideration and would pay their corresponding taxes as a second hand homes.

Buildings that are primarily for housing (buildings where at least 50% of the built area is intended for housing) can be paid a VAT of 10% (compared to 21% overall), including garages and annexes therein provided that the number of garage spaces for each owner does not exceed two units.

The currently established tax rates are:

10% in general or 4% in the case of public housing under the special regime or those developed by the local authorities.

IAJD (Documented duties): this tax is generated by signing in the notary and later registering in the registry. The type of tax applicable will be determined by each autonomous community, in general terms it would be between (0.5% - 1.5%) on the purchase price.

This tax will have to be added to the VAT, so that new housing will normally pay (10% VAT plus IAJD (0.5% - 1.5%).

 

Please note that all costs provided in this article have been obtained from the “Idealista” and provided in good faith, however for best guidance I strongly recommend that you should obtain your own cost from a professional.

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