We are often asked about the costs involved in buying and selling a property and although this information changes on a regular basis depending on what the government decides, we want to give you a rough guide to help you with your financial calculations.
The additional buying costs.
It is common practice in Spain for the buyer to pay for all the costs involved in buying a property. This is true apart from any mortgage cancellation fees that belong to the vendor as well as the Plusvalia tax which is also down to the vendor to pay. Make sure that this is written into your private sales agreement.
We always recommend that you allow for an extra 10% on top of the purchase price to cover all your buying expenses. You will more often than not have plenty of change left over, but we would prefer you allow more than you actually need so that you are not left short of money. If you are taking out a mortgage you will probably have to pay more than 10% due to the added mortgage costs and extra notary fees.
The biggest cost included is the stamp duty which is at present 6.5% of the amount declared on the escritura. This can vary and we recommend that you talk to your agent about this to discuss your personal situation. Sometimes the furniture will not be declared in the declared sale price because it doesn’t form part of the property and therefore you will not pay the stamp duty on it.
Other costs that are included in the 10% are as follows;
• Notary public fees
• Land registry fees
• Legal representative
• Transfer of utility bills
• Debt checks
It is important that you sit down with your agent before you buy to work out what the estimated costs will be. We do not want you to have any surprises on the signing day.
The Sellers costs
If you are a Spanish resident there are not many costs involved for the vendor in the event of a sale due to the fact that the buyer pays for more or less everything.
If you are a non-resident you will be subject to a non-residents tax retention of 3% of the declared value which will be withheld from you on the day of the signing and will be paid on your behalf. You will receive confirmation of this from your agent. This is then deducted from any future capital gains you may have to pay to the Spanish tax authority. Your legal advisor will advise you about this.
We cannot advise you on your personal tax situation but as the vendor you are responsible for advising the tax man in the country of your residence. The law states that you should declare all worldwide income in the country of your own residence so we advise you to talk to your financial adviser on this subject.
If you own a mortgage on the property you are selling you are responsible for paying the cancellation and registry fees. It is normal practice for the buyers legal adviser to arrange this but they will require you to give them a deposit to cover the costs involved.
It is always better to contact your agent to discuss your personal situation because everyone is different and there are many ways that costs can be reduced dramatically.
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