Costs Explained: Buying, Owning, and Selling Property in Spain

Understanding the Costs of Buying, Owning, and Selling a Property in Spain

When considering purchasing a property in Spain, it is essential to understand the costs involved, not just at the time of purchase but also while owning and selling the property. Cristina, an expert real estate lawyer, breaks down these costs into three main phases: buying, holding, and exiting.

Buying Costs

The costs associated with purchasing a property depend on whether you are buying a new build or a resale property.

Resale Property

7% Transfer Tax (ITP) – This tax applies to second-hand properties.

Notary & Land Registry Fees (~1%) – These costs are necessary to register the property officially.

Legal Fees (~1%) – Hiring a lawyer to oversee the transaction is highly recommended.

New Build Property:

10% VAT (IVA) – Instead of the transfer tax, new properties are subject to VAT.

1.2% Stamp Duty – An additional tax on new property transactions.

Notary & Land Registry Fees (~1%) – Similar to resale properties, these are required for official registration.

Legal Fees (~1%) – Engaging a lawyer ensures a smooth process.

Holding Costs

Once you own the property, there are ongoing expenses to keep in mind:

Community Fees – These vary depending on the services provided by the community (e.g., pools, gardens, security). Payments can be monthly, quarterly, or semi-annually.

Garbage & Council Tax – Paid annually, this varies based on the municipality where the property is located.

Utilities & Maintenance – Water and electricity costs are generally minimal but should still be considered in your budget.

Selling Costs

When you decide to sell your property, there are several costs to be aware of:

3% Retention for Non-Residents – If you are a non-resident seller, 3% of the sale price is retained as an advance towards capital gains tax.

“Plusvalía” Tax – This is a municipal tax based on the increase in the value of the land over the period of ownership.

Real Estate Agent Fees – If you sell through an agency, their commission should also be factored into the final costs.

Understanding the financial implications of buying, holding, and selling a property in Spain can help buyers and sellers make informed decisions. Whether investing in a new build or a resale, being aware of these costs ensures a smoother process and avoids unexpected surprises. Consulting with legal and real estate professionals can further assist in navigating these expenses effectively.