How Much Does it Really Cost to Buy a Property in Spain?


Agent With Tablet Pc Showing House To CoupleBuying a property abroad is a big decision. If you have decided to purchase a holiday home in Spain, or are moving there for good, it is vital that you understand all of the costs involved in buying there.

David Comber, the Senior Trader at Smart Currency Exchange, has put together a helpful list of the main costs involved with buying a property in Spain. He also has some more helpful tips for making your purchase a success.

The cost of buying a home in Spain varies, depending on several factors: if the property is a new build or resale; the actual purchase price; and whether you are a cash buyer or are buying with a mortgage.

Generally, Comber advises allowing 10-15% of the purchase price to cover all taxes and fees.

These costs include:

  • If you are buying a resale property, transfer tax (ITP) must be paid – this is usually charged at 8% across the whole of Spain, including the Spanish islands, however, in Costa Blanca (except Murcia), it is 10%.
  • Notary fees – these average €400-€900.
  • Land Registry fees – typically around half the cost of notary fees.
  • Independent lawyer fees – range from €1,000-€2,000.
  • Valuation fees – about €350.
  • Stamp Duty – 1.5% of the mortgage deeds.
  • Lender’s commission – around 1% of the capital loans, if you are buying with a mortgage.
  • VAT – 10%, instead of ITP if the property is new build, or 4.5% in the Canary Islands.
  • Stamp Duty for a new build – around 1.5% of the purchase price.

Ongoing costs 

You must also factor in the ongoing costs that you will be charged, such as IBI (similar to a community charge), overseas property insurance, maintenance and utility costs.

If you decide to rent your property out to tourists, you will attract a healthy income if you buy in the right place, but remember that income tax must be paid on any rental income, whether you are a resident of Spain or the UK. Also, take note that more and more local authorities are requiring holiday home landlords to apply for a license before letting property to tourists. Consult your agent if you are considering this.

Hidden costs

As a non-resident, you will need a tax identification number (NIE) to purchase a property. This is issued by the General Directorate of the Police and must be used on all tax returns and communications addressed to the tax authorities. This must be processed before completion, as you cannot buy a property in Spain without one.

Your budget

With so many different costs to think about, you must make sure you get the most for your money when transferring funds to Spain. An established currency specialist can help you determine your budget, specific requirements and the different costs you’ll need to pay in order to protect your money from currency rate fluctuations.

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