As a general rule, the fees depend upon the type of property, the value and where the property is purchased from. Also, if a mortgage is being used to fund the purchase, the costs will be increased. As a guide, it is recommended that purchasers have approximately 12%-15% cash available to pay for initial expenses. If the property in question is purchases off-plan directly from the developer, which was more common in the boom or pre-crisis days, there will be an IVA (VAT equivalent) rate due of 10%. This is in addition to the 1.5% stamp duty. While second-hand properties are not subject to IVA, the stamp duty rises to a hefty 10% of the total purchase price.
What foreign buyers will find confusing is the calculation of notary and registry, which vary according to the property. Legal fees are a negotiable 1% but complications or delays will lead to disproportionate increases from the quoted price – this is definitely a point to watch out for.
For the selfbuilders out there, sites or plots attract IVA of 21% in addition to the 1.5% stamp duty.
Commercial properties in Spain will always attract 21% IVA, new or second-hand.
Oh, a little advice that we have picked up along the way is to purchase any ‘extras’ at the same time as the property. By extras, we are referring to garage spaces (if not included), or extra storage rooms etc. By purchasing the additional space as part of the one deal, the applicable IVA rate will be 10% rather than the 21% payable if the additional space is purchased at a later date!
Finally, overseas buyers ought to be aware that by owning property in Spain, there are automatically liable for income tax every year that they own the property, irrespective of whether they are tax resident in Spain or the UK (or anywhere else). This tax is based on the assessed value of the property or the valor catastral, as per the annual IBI or rates tax receipt.