Market Insights

The Cost of Buying and Owning Property in Andalucía

23rd September 2020
The Cost of Buying and Owning Property in Andalucía


In this article, we will outline all the costs and expenses of buying as well as owning a property in Spain. It goes without saying that any one thinking about buying a property in Spain should be aware of these costs and expenses in order to make well informed decisions.


The costs associated with BUYING a property in Andalucia


  1. The selling price

Obviously, the most important cost will be the selling price of the property in question.

Unless otherwise explicitly specified, property prices as advertised on portals and estate agent´s websites are always net of taxes and other expenses. But given that it is always the seller who pays estate agent fees, prices do include these estate agent´s fees.


  1. Costs, taxes and expenses when buying

Generally speaking and as a rough guide, when buying a property in Andalucía, you have to add between 8% and 11% of the purchase price for re-sale properties and between 10% and 15% of the purchase price for new properties.

In what follows, we will delve a bit deeper in the various cost components that make up this percentage. In addition, we will address the costs one faces once one becomes the owner of the property.

We have to make a distinction between two specific scenarios:

  • Costs and taxes associated with buying a new home from a developer (or bank)  =  FIRST TRANSMISSION
  • Costs and taxes associated with buying a home which was sold before (= resale home)  = SECOND AND SUBSEQUENT TRANSMISSIONS


2.1. Costs associated with buying a new home from a developer (or bank) (=first transmission)

A home which was never sold before, no matter how long ago it was built, counts as a new home.  Below are the costs and taxes involved when buying a new property:
VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)
VAT and Stamp Duty are paid by the BUYER and will be levied on the purchase price of residential properties which are being sold for the first time and were never previously occupied, or on the purchase of commercial properties and plots of land.
Currently (September 2020), the applicable VAT percentage in Andalucía is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land. This percentage was increased from just 4% to the current 10% on 01/01/2012.
If any deposit is paid before completion of the sale, this deposit will be subject to VAT.
In Andalucía, the Stamp Duty (AJD) is currently 1.5% of the purchase price (it will be different in other autonomous regions of Spain, whilst there are also reduced rates in certain cases).

2.2. Costs associated with buying a resale home in Spain (second transmission)

These are the costs that you will incur when buying a Spanish property that has been sold before and are the Transfer tax and the Stamp Duty.

Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)
This tax applies if the property is deemed to be a second or subsequent transfer of ownership (i.e. not the first time a newly built home is bought). This tax is also paid by the BUYER. In contrast to the VAT liability for new built homes, any deposit paid before completion of the re-sale is not subject to ITP pro rata but the full amount of ITP has to be paid upon completion. In this re-sale scenario there is no VAT to pay, whilst stamp duty is already included in this tax.
Andalucía has its own (higher) Transfer Tax rates which deviate from the national rate ( 7%) as follows:
The first € 400,000 of the purchase price will be taxed at 8%. From € 400.000,01 to € 700,000 the Transfer Tax is 9% and any part of the purchase price above € 700.000,01 will be taxed at 10%.
Also here, some reductions apply (The Transfer Tax percentage will be reduced to 3.5% for homes with a purchase price lower than €130,000 if the buyer is less than 35 years old).
Capital gains provision when buying from non-residents
If the seller of the re-sale property is not a resident in Spain, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities. In case this is not done, the tax authorities will consider the property as the asset backing the capital gains tax liability of the seller.

2.3. Costs associated with both new build and resale property purchases in Spain

2.3.1. Estate Agency Fees

As mentioned before, estate agency fees or commissions are paid by the seller unless otherwise agreed, and will be incorporated into the sale price. If the buyer uses a search agency then search fees are paid by the buyer.


2.3.2. Lawyer Fees

Especially as a foreigner buying property in Andalucía, you are strongly advised to hire the services of a lawyer. He/She will review contracts on your behalf and explain all the legal and administrative issues you will encounter. He / She will also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).
The standard legal fees for a conveyancing lawyer are about 1% of the purchase price but some lawyers will charge as much as 1.5%.

2.3.3. Notary and Land Registry Fees

Notary fees are calculated to a scale agreed by the authorities. Therefore, all notaries charge the same fee for the same concept. In this case, i.e. establishing a Public Deed for the purchasing of a residential property will be somewhere in the region of €500 to €1,800 (it will depend on the number of pages in the Deed).
Land Registry Fees are also calculated according to a scale agreed by the authorities. They will amount to 50% to 70% of the notary fee.


2.3.4. Mortgage costs
These will vary from lender to lender, so you should check with your provider. It is however important to realize that a mortgage gives rise to an additional public deed and will therefore increase notary fees as well as land registry fees and stamp duty.


Costs associated with OWNING a property in Spain


General maintenance costs, Home Insurance

Obviously there will be maintenance costs (cleaning, repairing, utility bills, pool and garden maintenance etc) associated with owning a property in Spain. These will be very individual and linked to the size and type of the property you own.


Community Fees

We like to draw special attention to the community fees as they can be considerable yet are very often overlooked. Owners of property that is part of any (gated) complex with security services and landscaped gardens and in which common zones are shared with other owners ( known as the Comunidad de Propietarios) will have a shared liability to paying community fees for the upkeep of the common areas, and any other services mentioned above.


Apart from these community fees and general maintenance costs, there are a several taxes and fees that you face as a property owner in Spain.


IBI = Municipal Property Tax (Impuesto Sobre Bienes Inmuebles)

This tax is collected by the local government and is very similar to the council tax in the UK. Irrespective of whether you are a resident or not, as an owner of a property in Spain you will be subjected to the IBI tax. This tax is calculated on the basis of the cadastral value (an administrative value that is usually lower than the market value, sometimes considerably so) and will be set by your local town hall. The IBI tax rate goes from 0.405% – 1.16% of the catastral value depending on the Spanish region.


Personal Income Tax for Non Residents (Impuesto sobre la Renta de No Residentes – IRNR)

Non-residents who own property in Andalucía have to pay an annual income tax that varies according to whether the property is rented out or not.

Not rented out
Non-resident property owners who do not rent out their property and who do not have any other source of income in Spain pay income tax based on the value of their property. The tax rate is fixed as 24% (Non-EU citizens) or 19% (EU citizens + Iceland and Norway) of 2% of the cadastral value of the property.
The cadastral value can be found on the IBI receipt.
Rented out
If non-residents rent out their property and as such receive an income, the applicable tax rate (19% or 24% as above) will be applied on the net rent obtained by the owner. EU citizen owners who rent out their property are allowed to deduct their expenses incurred during the period the property was rented out, as well as 3% annual building depreciation.

Residents in Spain will have to pay the income tax based on their income earned during the year. The tax rate depends on the level of income.


Annual Wealth Tax (Impuesto Sobre Patrimonio)

This tax affects residents on their worldwide assets and non-residents with assets in Spain over € 700,000. There is a further exception of € 300,000 for the main residential home.

This wealth tax is an annual tax, payable on the total value of your taxable assets on the 31st of  December. If you are a resident in Spain, you are liable to be taxed on your assets worldwide. If you are a non-resident, then only on your Spanish assets. The progressive tax rates range from 0.2% up to 2.5%.

This tax has been changed several times in recent years, so check with your accountant for the latest situation.


The Cost of Buying and Owning Property in Andalucía

Frank PJ Nagels


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