Unveiling all Expenses in Luxury Property Acquisition: Taxes & Beyond Taxes

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The Costs of Buying Luxury Property in Spain

Posted by realty on January 19, 2024

Buying a luxury property in Spain involves various costs beyond the purchase price and taxes. Understanding these costs is crucial for prospective buyers. We present a comprehensive overview of the expenses associated with purchasing high-end real estate in Spain, based on a study conducted by the Colegio de Registradores de España, the Association of International Property Professionals (AIPP), and The Royal Institution of Chartered Surveyors (RICS).

Direct Costs

  1. Purchase Price
    • Paid to the seller, minus any deposit already paid.
  2. Estate Agent Fees
    • Paid by the party who contracted the agent, typically the seller.
  3. Notary’s Fees
    • Divided by law: the seller pays for deed authorization, and the buyer pays for deed copies.
    • Fees are set by the Tariff and Regulatory Fee, ranging from 0.5% to 1% of the declared price.
  4. Gestor Services
    • If engaged, requires payment based on notary and registrar invoices.
  5. Land Registry Fees
    • Paid by the buyer for registering their right, and optionally, the mortgage.
    • Fees determined by a tariff, approximately 1% of the deed value.
  6. Legal Fees
    • Range typically from €1,500 to €3,000, depending on the property’s complexity.
  7. Mortgage Costs
    • Include valuation fees (around €500) and arrangement fees.
    • Notary’s costs increase due to a separate title deed.
  8. Bank Costs
    • Involves writing a banker’s cheque or transferring funds, around 0.5% of the transferred amount.

Other Costs

  1. Municipal Tax on Increase in Value of Land
    • Formerly “plusvalía,” a local capital gains tax paid by the seller.
    • Buyer responsible if the seller is a non-resident.
  2. Property Ownership Tax (IBI)
    • An annual local tax based on cadastral value, usually lower than market value.
  3. Wealth Tax (Patrimonio)
    • Annual tax based on total net assets; rates vary from 0.24% to 3.03%.
  4. Income Tax for Non-Residents (IRNR)
    • 20% of rent for house rental; 20% of 1.1% of cadastral value for personal use.
  5. Income Tax for Residents (IRPF)
    • Applies if residing in Spain for more than 183 days; annual declaration of global income.
  6. Estate Equity Income Tax (Ganancias Patrimoniales Inmobiliarias)
    • Calculated on the difference between purchase and selling prices.
  7. Rubbish Collection Tax
    • Paid once or twice a year, set by local council.
  8. Water Supply and Sewerage Tax
    • Paid quarterly, based on water consumption.

Non-Tax Related Costs

  • Community Expenses: For condominiums and urbanizations, set by the General Meeting of Owners.
  • Gardening and Cleaning Services: Included in community expenses or paid separately.
  • Land Telephone Line and Internet: Monthly payments for various service packages.
  • Electricity: Monthly payments with a basic rate and variable usage costs.

Understanding these costs is vital for a transparent and informed luxury property purchase in Spain. For detailed breakdowns, consult with professionals and request comprehensive invoices.

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