Property buying fees
Here are some examples of the costs to look for:
- solicitor (or 'notaire') fees and commission
- estate agent fees
- property tax
- plusvalia tax
- foreign currency exchange costs (if applicable)
- VAT & stamp duty
- mortrgage fees
Solicitor or 'notaire' fees
Notary fees and a property registration fee will also be due. The amounts will vary according to the purchase price of the property.
Estate agent fees
This is a question you should ask the estate agent at the beginning of your purchasing process. They will earn commission from the sale and so will naturally try to get the best possible price for the property.
These costs include a property tax which is around 7% of the price paid for the property. This property tax is also known as the transfer tax, or ‘Impuesto de Transferencia de Propiedad’.
Plusvalia Tax (Capital Gains Tax)
The plusvalia tax is normally paid by the seller but sometimes this tax is passed on to the buyer. It is similar to capital gains tax and is related to how much the land on which the property sits has appreciated during the time of the previous ownership.
Foreign currency – foreign exchange rate fluctuations
If you are planning to purchase your overseas property with equity released from the remortgage of a UK property or other cash funds, then you may need to convert your money into euros. This can be expensive and risky as you leave yourself open to currency exchange rate fluctuations. There are steps you can take to minimise these risks, such as using a company to effectively ‘lock’ your exchange rate months in advance. Today, there are a lot of companies that provide currency exchange risk solutions.
VAT & Stamp Duty
There is no additional stamp duty or VAT to pay for existing properties.
If you are buying a new build, you will be liable for VAT on the price of the property. Stamp duty is also payable – this can range from 0.3% to 2.0% depending on the property. You are responsible for paying this tax by filling in a form available from your local government financial institution. Ask for a bank guarantee when making stage payments – the developer is legally obliged to secure deposits in a special, separate account which can only be used for building purposes. An off-plan property should have a certificate (certificado de final de obras) proving the finished build has been signed off by a registered architect. For more information on this, take a look at the British Consulate advice pages.